More On CIB Bailout Numbers Don't Add Up

You've seen my reporting on how the $48 million legislative bailout plan for Marion County's Capital Improvement Board doesn't add up. The IBJ has concluded the same. And now the Star's Brendan O'Shaughnessy reports the same. He writes:

Tax increases called for under Mayor Greg Ballard's rescue plan will go far in helping the city's ailing sports board, but millions of dollars more will still be needed to fully close its projected 2010 budget deficit.

It may be several years, if not longer, before Ballard's approach generates enough revenue to cover the Capital Improvement Board's higher expenses, including operating costs at Lucas Oil Stadium that are twice as high as those at the Colts' old home in the RCA Dome.

The Republican mayor's plan would give the City-County Council the power to raise taxes in Marion County on alcohol, hotel rooms, car rentals and stadium tickets. It also expands a special tax district Downtown to include the JW Marriott hotel complex being built next to the Indiana Convention Center.

Late last week, Ballard administration officials estimated that the most the mayor's plan can raise in its first year is $27.4 million. The CIB's deficit next year is expected to be $47.5 million.

Why should members of the City-County Council be asked to risk political suicide by voting for all of these tax increases in times of double-digit unemployment to adopt a plan that doesn't even come close to adding up? Members of the Municipal Corporations Committee pressed CIB President Bob Grand on the analysis Thursday night. Grand's response made it clear that neither he nor anyone else associated with the CIB had conducted a competent fiscal analysis. Instead, Grand deferred to the Indiana General Assembly to get it right. The public could only conclude that they don't know what they're doing, particularly when they tell us a plan raising parking fees that was included in the state bailout plan was simply a typo.

There are also a couple of items of note in the Star's "Behind Closed Doors" column today. Grand announced at Thursday's Municipal Corporations Committee meeting that the Capital Improvement Board had finally gotten its own website at which the public could access information on it for the first time. I thought he was just pulling our leg. I searched the City's website up and down and couldn't find it. That's because it's not on the City's indy.gov website. A link on indy.gov for boards and commissions draws a blank when you enter it. If you enter http://www.capitalimprovementboard.org/, you will be directed to a website for the CIB. It has the CIB's meeting schedule, board minutes, budget and financial reports on it, as well as its agreements with the Colts and Pacers. The most recent financial statement, 2007, shows the CIB's staggering debt: over $348 million in capital lease debt obligations; $34 million is owed to Circle Centre investors; $28 million owed on two separate revenue bonds of $3.1 million and $24.8 million. Close to $500 million more is owed to the State of Indiana. Who knew the CIB shares the operating costs for Capital Commons garage? Isn't that the garage Simon's employees use for free at their corporate headquarters? The audited financial statement prepared by BKD made no warning about the risks associated with the interest rate swap notes the CIB held. To say the report downplayed the CIB's future financial plight would be an understatement. One would expect a different read for an organization that has run a deficit 10 years in a row.

The "Behind Closed Doors" column also has an item on the discussion about Bob Grand's conflict of interest that I raised at Thursday's Municipal Corporations Committee meeting:

A hearing on the CIB's deficit in the City-County Council turned personal last week when a council member and blogger criticized Grand.

Ed Coleman, a Republican-turned-Libertarian councilman, asked Grand to resign.

Grand, managing partner of Barnes & Thornburg's Indianapolis office, has faced questions about conflict of interest since he took the CIB job last year. He said he had to go to great lengths to distance himself from his firm's representation of the Indiana Pacers and his own work for the Simon family, which owns the Pacers.

Critics say the measures he took weren't enough. They pounced again at the meeting, saying Grand is too conflicted to lead a board negotiating a new lease with the Pacers. The board has from the start assumed it would take over the cost of operating Conseco Fieldhouse -- $15 million per year -- from the team.

Coleman asked how Grand could lead the board if he has to abstain from votes on the major issue of the day. Grand said he would not step down.

"If you want someone of my qualifications, with my experience, and with my reputation, that's what you'll get," Grand told council members.

Local blogger Gary Welsh, a critic of Grand and the CIB, took a shot, too.

"I think the Pacers are very well represented here by the president of the CIB, Bob Grand, their attorney," Welsh said.

Grand responded that he was glad to see Welsh criticize him in person rather than online. He said he is aware of criticism "in blogs that most people don't read."

I might add that Grand said I had it wrong. It is his law firm and not he which represents the Simons. It still galls me that people like Bob Grand think that there aren't people in our community who are qualified to lead the CIB unless they have conflicts of interest like him. And contrary to Grand's assertion, the blogs were not alone in questioning his conflict. The Star's editorial board raised similar concerns.