Wednesday, June 10, 2009

Is Privatization The Guv's Solution To The CIB Mess?

Democratic blogger Terry Burns speculates that Gov. Mitch Daniels wants to turn over management of the CIB's facilities to SMG, a private company that bills itself as "Worldwide Entertainment and Convention Venue Management." Burns says the Daniels administration used SMG to produce a financial analysis that showed that the CIB's costs for managing Lucas Oil Stadium and the convention center far outpace costs incurred by other cities in managing similar facilities.

[A copy of SMG's analysis prepared for the Governor's office can be accessed here. An explanation of where cost savings can be realized, which was prepared by Bob Goad, can be accessed here.]

Actually, the first person to raise a concern about using SMG to privatize the CIB's facilities was City-County Councilor Joanne Sanders, the Democratic Minority Leader. Sanders has a big conflict of interest on the CIB issues. She works for the union which represents the convention center workers. As I've previously reported, Sanders, CCC President Bob Cockrum and CCC Vice President Ryan Vaughn all have conflicts of interests in dealing with the CIB bailout. Cockrum's son is a top executive with the developer of the new J.W. Marriott Convention Center Hotel being built adjacent to the convention center, a business which stands to receive tens of millions in direct public subsidies from the City. Vaughn's law firm, Barnes & Thornburg, represents the Indiana Pacers and their owners, the Simons.

I don't know whether privatization is the answer to the CIB's financial mess. If it is the answer, then what is the point in combining it into an even larger, locally-controlled authority run by an unaccountable, unelected board? I would also be interested in knowing who decided to retain SMG to assist the Daniels' administration with this issue. Has SMG hired an Indiana lobbyist? Inquiring minds want to know. Burns suggests a privatization deal might be done on a no-bid basis. That's not allowed under Indiana law. The Public-Private Agreements Act requires an RFP process to contract the management of a public facility. The City of Lawrence ignored this law when it turned over management of the City's water company to political cronies of former Mayor Tom Schneider.

And for your daily laugh, check out a story in today's Evansville Courier Press. Indiana Pacers Sports & Entertainment President Jim Morris gave another one of his bullshit speeches to the Rotary Club in Evansville. Morris likes the Governor's plan for bailing out the CIB and, wouldn't you know, he tells his audience it isn't a bail out. "It’s not a bailout,” Morris said. “The issue is that Indianapolis as it built Lucas Oil Stadium was not sure what the expenses would be. It knew it needed to make a commitment to the Colts to stay for a long period of time, and they’ve done that. Now the issue is being addressed.” Gee, thanks for clearing that up for us, Jim. Morris also told the Rotary Club the Pacers lack the financial capacity to operate Conseco Fieldhouse. When are you going to show us those audited financial statements, Jim? I didn't think so.


jabberdoodle said...

I read somewhere that the two analyses of operating expenses done for the Gov were done for free.

Perhaps we now know why.

Unknown said...

the "reports" are posted on wthr

Paul K. Ogden said...

If the answer is privatization you can bet that there will be a politically-connected contractor there to do the bidding.

Jabber, I agree. Look out when a contractor agrees to do something for free. Remember Venture Real Estate and John Bales?

I'm not sure that the contract would have to be bid out. An RFP is a request for a proposal, not a bid, correct? Nonetheless, you know how the bidding is often rigged. You write the specs so only a favored company qualifies to rig the bid.

Gary R. Welsh said...

An RFP process is a form of competitive bidding, although clearly it does not require the awarding of a contract to the lowest bidder. Subjectivity can creep into the process and favor a politically-connected bidder.

I know said...

By the reports today whoever gets a private contract might get a casino contract too! If the legislature throws that out into the street the crooks in suits will multiply like rabbits.

They will trash the contract and in a few years be back either defaulted on State backed bonds or bankrupt. If the State lets the private company write their own contract and stray away from State Boilerplate contract rules it will be status quo. Indiana has already done it.

A private contractors best dream come true. Ask yourself which good old boy or political crony dressed in a contractors outfit will it be. Please remind yourself of the fear of a ten year contract.

The State of Indiana has approved a 40 year contract for a group that in three years has defaulted once, selectively defaulted twice more and is now in distressed exchange on bonds taken out on a forty year contract. What about the next 37 years?

I bet you all could come up with a list of ten to compare notes. Some of the gambling contacts are on the CIB!

The wild, wild midwest LIVES ON!!!!!!!