Monday, October 11, 2010

Rule Of Law Does Not Apply To The CIB

The Marion County Alliance of Neighborhood Associations (MCANA) has questioned the legality of the interlocal agreement entered into between the Metropolitan Development Commission and the Capital Improvement Board to divert $8 million a year annually to the CIB out of excess TIF funds that are derived from property tax collections within a downtown TIF district. MCANA cites a state law requiring the CIB's fiscal body, the Indianapolis City-County Council, to approve the interlocal agreement. WRTV reports:

"We question whether the law is being correctly interpreted," said group President Cathy Burton, who wrote letters to council members expressing concern. "I hope they'll listen and will hear us and step back and look a little more closely at how they're making the decision."

Burton said McANA read the law to mean that the City-County Council is the CIB's fiscal body, meaning members would have to approve the deal.

But representatives with the CIB said their fiscal body is the group's own board, despite the fact that the City-County Council has to sign off on the organization's budget.

"We followed what is required and we had very open discussions at the CIB board and MDC, which was what was required for this transaction," said CIB President Ann Lathrop. "Before we entered into this transaction, we received two legal opinions from two reputable law firms in town."

Deron Kintner with the Bond Bank, the debt-issuing entity for the city, told 6News that he believes the decision was legal and that he does not think the city will be susceptible to lawsuits.

But Burton said no matter how the law is interpreted, the City-County Council and the public should have been involved in a decision involving $8 million in taxpayer money.

"There needs to be more public conversation, even if they're not required to do so by law," Burton said. "Shouldn't the city council be looking at this? Our answer is yes."
When Pat Andrews, MCANA's Vice President first raised this issue with me, I told her that's exactly how the CIB would claim its actions were lawful. Never mind that the CIB is not statutorily authorized to levy a property tax, never mind that the CIB has never been a recipient of property tax revenues, never mind that no public notice was ever provided of this plan to divert property tax revenues to a governmental entity that has never been funded with property tax revenues and never mind that the City-County Council is truly the fiscal body for the CIB because it is the body by law that must appropriate any money spent by the CIB during the annual budget process for city-county government. The rule of law does not apply to the CIB. It's just that plain and simple.

That is why the CIB could enter into a loan agreement with the Indiana Pacers obligating itself to loan $30 million to the privately-owned NBA franchise over the next 3 years without any appropriation in its 2010 budget to make such loans or, more importantly, absolutely no authority granted to it in its enabling statute that permits it to loan money to a private corporation for any purpose. That is why the CIB could write into that loan agreement a provision that forgives repayment of the initial $10 million it has already loaned to the Pacers if the City-County Council refuses to go along with the loan plan. That is why the CIB can deposit the $8 million from property tax revenues into a bond fund intended solely to repay indebtedness of the CIB instead of its operating budget fund, but cannot offer any explanation to City-County Councilors at tonight's Municipal Corporations Committee meeting tonight on its budget why it did this. That is why the CIB can agree to borrow $27 million from the State of Indiana without a sinking fund established to repay that loan. That is why the CIB could borrow a similar amount from the investors in Circle Centre Mall more than a decade ago without establishing a sinking fund to repay that loan. That is why Ann Lathrop can tell members of the committee that the CIB's 2011 budget relies on no new tax revenues even though that is exactly what the TIF revenues represent. That is why the CIB can spend $4 million from this new source of revenue that was never appropriated to it by the City-County Council in its 2010 budget. That is why the CIB's President can describe it as simply a minor audit exception when the State Board of Accounts determined that the CIB had paid millions of dollars in legal fees to Toby McClamroch and his law firm as the CIB's counsel without a written fee agreement as required by state law. You see, the rule of law doesn't apply to the CIB. It's just that plain and simple.

Ann Lathrop boasted that she had fixed a $47 million deficit she and the Ballard administration inherited. That's total bullshit. She hasn't fixed any deficit. We've poured tens of millions of dollars more into this rat hole and they've passed out tens of millions of dollars more into private hands. That $47 million deficit still exists in the form of debt for which the CIB will freely admit it has no plan for repayment. Yes, there will have to be even more tax increases in the future to pay for that debt. Lathrop knows that. City Controller David Reynolds knows that. And Mayor Greg Ballard knows that. But all of them will lie and tell you that won't be necessary for bringing the CIB's budget under control. Councilor Angel Rivera actually patted Lathrop on the back for a job well done during tonight's hearing. Either he is totally stupid or is just the consummate ass kisser trying to win favor to help land more government contracts through his city council position for the MBE firm that employs him.


Paul K. Ogden said...

Gary, it absolutely blows my mind that the CIB is claiming it is its own fiscal body. That's about the silliest thing I've ever heard.

As far as your comment regarding Rivera:

"Either he is totally stupid or is just the consummate ass kisser trying to win favor to help land more government contracts through his city council position for the MBE firm that employs him."

Why can't Rivera be both? He has quickly becoming the biggest embarassment for the Republicans on the Council. At least with the other councilors, if they really don't know what they're talking about, they are smart enough to keep quiet. Rivera doesn't seem able to do that.

Gary R. Welsh said...

The Republican council is a total joke, Paul. I find most of them totally embarrassing. They have Barb Malone chairing that committee. She is totally playing the suck up game now that she's getting whatever they gave her to buy her off. Remember how independent she was before? Something obviously caused her to suddenly lose her independent streak. I wish they would do away with the at-large councilors altogether. Twenty-five single member districts is enough.

Marycatherine Barton said...

I also wish that they would get rid of the at-large councillor slots, AI. Thanks.

Paul K. Ogden said...

The at-large positions were originaly instituted to ensure R control of the Council when Unigov was first adopted. Now it works in reverse - the four at-large positions will almost always go Democrat given their base vote in the county. I doubt the Ds will want to get rid of the at-large. However, if the Rs get control of the state legislature, it's possible the positions will be eliminated.

Had Enough Indy? said...

Gary, you bring up a point I had forgotten - but which is very important.

That being the CIB does not have the legal authority to loan anybody anything. Not the Pacers. Not the Simons. Not my Uncle Frank.

dcrutch said...

Same gouging of the citizen, just a different party and variation than how they do it in Washington. Here, "business development" (Pacers, Lilly, et al) is king while conventional city infrastructure (schools, libraries, buses, foreclosure tear-downs), awaiting a promised economic resurgence, is left to crumble or get boarded-up.

In D.C., the private sector is disdained ("the rich") or thrown an unpaid-for federal bone occasionally ("stimulus"), while we federally lard-up on our "rights" to mandates, oversight and regulators (national health and financial "reform").

With the blatant excesses of each ideology, is it any wonder the former splinter movement of reducing goverment is now the leading issue for a majority of the American people?