IBJNews

CIB finances improving, though concerns remain

Back to TopCommentsE-mailPrintBookmark and Share

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.

Cuts include:

— $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.

 

ADVERTISEMENT

  • Receipe For Failure
    Anytime a company needs to depend on borrowed funds to pay for current (year) operations must ask themselves "does this financial model or business plan really that sound.The amswer is obvious, is it not? If this were a private business entity, the answer would be to close. Since it is a government operation,put it on the taxpayers.
  • Pacers lease with CIB
    It must be pointed out that according to previous IBJ coverage, the Pacers current lease does not give them the right to renegotiate.

    http://bit.ly/12t2vL
    "Another misconception is that the fieldhouse contract gives the team the right to renegotiate its lease after 10 yearsâ??it actually gives the team the right to cancel the lease after the first 10 years if it doesnâ??t reach certain profitability targets. Voiding the lease, though, would cost the team dearly. It would be obligated to pay CIB a termination fee â??based on a formula sufficient to reimburse the city for the economic effects of such early termination,â?? the contract says. The minimum penalty is $50 million, but the contract says the Pacersâ?? cost for terminating the lease in 2012 could be as high as $144 million."

    City leaders need to consider the Pacers financial situation is more of a league issue than a city issue, as more than half of NBA teams are losing money.

    http://bit.ly/38ZkWo
    "Saying that less than half the teams in the league made a profit last season, Stern spoke at length Tuesday about the financial difficulties facing the league's 30 franchises."

    The NBA has actually offered some assistance to their struggling teams but he Pacers turned it down.

    http://bit.ly/CtUjX
    "12 of the league's 30 franchises plan to borrow between $13 million and $20 million a piece."
  • Who Controls the CIB?
    Why would the Indianapolis Capital Improvement Board need state legislators approval of any recommendations the committee might endorse?

    Does the state legislature and Governor now control the CIB instead of the Indianapolis Mayor and the City County Council?

Post a comment to this story

COMMENTS POLICY
We reserve the right to remove any post that we feel is obscene, profane, vulgar, racist, sexually explicit, abusive, or hateful.
 
You are legally responsible for what you post and your anonymity is not guaranteed.
 
Posts that insult, defame, threaten, harass or abuse other readers or people mentioned in IBJ editorial content are also subject to removal. Please respect the privacy of individuals and refrain from posting personal information.
 
No solicitations, spamming or advertisements are allowed. Readers may post links to other informational websites that are relevant to the topic at hand, but please do not link to objectionable material.
 
We may remove messages that are unrelated to the topic, encourage illegal activity, use all capital letters or are unreadable.
 

Messages that are flagged by readers as objectionable will be reviewed and may or may not be removed. Please do not flag a post simply because you disagree with it.

Sponsored by
ADVERTISEMENT

facebook - twitter on Facebook & Twitter

Follow on TwitterFollow IBJ on Facebook:
Follow on TwitterFollow IBJ's Tweets on these topics:
 
Subscribe to IBJ
  1. If I were a developer I would be looking at the Fountain Square and Fletcher Place neighborhoods instead of Broad Ripple. I would avoid the dysfunctional BRVA with all of their headaches. It's like deciding between a Blackberry or an iPhone 5s smartphone. BR is greatly in need of updates. It has become stale and outdated. Whereas Fountain Square, Fletcher Place and Mass Ave have become the "new" Broad Ripples. Every time I see people on the strip in BR on the weekend I want to ask them, "How is it you are not familiar with Fountain Square or Mass Ave? You have choices and you choose BR?" Long vacant storefronts like the old Scholar's Inn Bake House and ZA, both on prominent corners, hurt the village's image. Many business on the strip could use updated facades. Cigarette butt covered sidewalks and graffiti covered walls don't help either. The whole strip just looks like it needs to be power washed. I know there is more to the BRV than the 700-1100 blocks of Broad Ripple Ave, but that is what people see when they think of BR. It will always be a nice place live, but is quickly becoming a not-so-nice place to visit.

  2. I sure hope so and would gladly join a law suit against them. They flat out rob people and their little punk scam artist telephone losers actually enjoy it. I would love to run into one of them some day!!

  3. Biggest scam ever!! Took 307 out of my bank ac count. Never received a single call! They prey on new small business and flat out rob them! Do not sign up with these thieves. I filed a complaint with the ftc. I suggest doing the same ic they robbed you too.

  4. Woohoo! We're #200!!! Absolutely disgusting. Bring on the congestion. Indianapolis NEEDS it.

  5. So Westfield invested about $30M in developing Grand Park and attendance to date is good enough that local hotel can't meet the demand. Carmel invested $180M in the Palladium - which generates zero hotel demand for its casino acts. Which Mayor made the better decision?

ADVERTISEMENT