Approaching the end of 2009, Indianapolis' cash-strapped Capital Improvement Board is on much more solid financial footing
than it was at this time last year.
The not-for-profit is on target in 2010 to turn a $47 million budget deficit into a surplus—additional money that could be used in negotiations with the Indiana Pacers over Conseco Fieldhouse operating costs.
The CIB, which will discuss its financial situation when it meets Monday afternoon, expects to improve its finances by making $26 million in cuts this year. It also avoided $25.5 million in debt-service reserve payments and is poised to collect roughly $11 million more in annual revenue.
Yet, it’s still unclear whether the CIB, which operates the city’s professional sports venues as well as the Indianapolis Convention Center, will absorb $15 million next year in fieldhouse operating costs.
A provision that allows the Pacers to renegotiate its lease after 10 years could trigger the additional cost, in order to keep the team in the city. An agreement has yet to be reached, although CIB officials continue to negotiate with the team.
That uncertainty and the ongoing fragility of the CIB’s finances prompted board Chairman Bob Grand to caution that the agency remains far from stable.
“We’re not out of the woods yet,” he said. “But we’ve done all the things that have made [the financial crisis] manageable.”
The CIB has reduced its operating budget from $78 million at the beginning of this year to a proposed $63 million in 2010, although the organization anticipates spending as little as $52 million.
— $4.5 million in budgeted renovations to CIB-operated facilities.
— $3.5 million in grant awards, including $2 million to Indiana Black Expo and $1 million in city arts funding.
— $2.5 million in salary and benefits costs from job cuts and continuing unpaid furloughs. Eleven positions have been eliminated, and pay cuts range from 5 percent to 15 percent.
— $2.2 million in printing, advertising and supply costs.
— $1 million in maintenance expenses.
“To be honest, a lot of it is just good old-fashioned belt-tightening,” CIB Treasurer Ann Lathrop said.
In addition, the General Assembly approved a 1-percent increase in Marion County's innkeepers tax, allowing the organization to capture an additional $3.4 million in annual revenue.
Lawmakers also approved expanding the Professional Sports Development Area, which enables the CIB to receive $8 million in sales taxes expected to be generated at the new downtown J.W. Marriott hotel.
And the CIB avoided $25.5 million in debt-service reserve payments in September by persuading the city and state to back up its insurance policy on more than $200 million in bonds.
The cuts could help build the CIB’s cash reserve, now at $22 million, to pay the $15 million in Conseco operating costs.
The CIB had amassed tens of millions of dollars in reserves before drawing down about $25 million to shore up the 2008 operating budget.
Ongoing concerns about the CIB’s financial health led the City-County Council in September to approve the formation of a committee to further help the CIB solve its money woes.
Councilor Michael McQuillen is chairing the group, which will meet for the first time at 6:30 p.m. Nov. 18 in Room 260 of the City-County Building.
“We want to find more efficiencies,” McQuillen said. “I will compliment the CIB that they have come a long way, but my goal as a city-county councilor is to make sure that this problem isn’t placed on the backs of Marion County taxpayers.”
McQuillen suggested the committee might explore whether it’s feasible for the CIB to share office space with other city organizations such as the Indianapolis Convention and Visitors Association or Indianapolis Downtown Inc.
“Those are three entities that largely do a lot of the same things,” he said.
Fellow councilors Ryan Vaughn, Joanne Sanders and Jackie Nytes also are serving on the committee, along with Paul Okeson, Mayor Greg Ballard’s chief of staff.
Any recommendations the committee might endorse would need approval from state legislators.
Still, the CIB’s financial situation has improved to the point that its members are considering whether to forgo the first installment of a state loan intended to help keep the agency afloat.
State legislators this summer authorized the CIB to receive $27 million—$9 million in annual loans the state will provide for three years—to help close the CIB’s budget shortfall.
The CIB will decide at its December meeting whether to accept the loan, although it still could use the remaining funds earmarked for 2010 and 2011.