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CIB saves $1M after state agrees to lower loan rate

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The city’s cash-strapped Capital Improvement Board received a drop of good news recently when it learned that a reduced interest rate on a state loan will save the agency about $1 million.

CIB officials are expected to publicly announce that news at a meeting Friday afternoon at the Indiana Convention Center, where they'll also vote on a $33 million bailout plan for the Indiana Pacers.

The CIB is expected to approve allotting $30 million over the next three years toward the operation of Conseco Fieldhouse, the home of the Pacers, in addition to at least $3.5 million for capital improvements to the 11-year-old building.

Though the CIB already announced its plans to give the Pacers the money at a press conference Monday, CIB members still must approve the funding.

“I expect this to be a widely attended meeting,” CIB President Ann Lathrop said. “I’m sure we’ll have some comments from the audience and a lively discussion of this among [CIB] members.”

The CIB is the public agency that manages several downtown facilities, including Lucas Oil Stadium, the Indiana Convention Center, Conseco Fieldhouse and Victory Field, among others.

Due to the CIB’s fiscal difficulties, the state last year agreed to loan the CIB $27 million through the State Treasurer’s office. The interest rate provided in December on the first $9 million of that loan was 5.25 percent. The rate was set due to the tenuous financial condition of the CIB and the fact that the 2008 financial statements were issued in May 2009 with a “going concern” opinion, explained Robert Vane, spokesman for Mayor Greg Ballard.

Although the 2008 financial statements were re-issued in November 2009 removing the “going concern,” the treasurer still found the CIB to be a potential financial risk.

After the CIB’s 2009 financial statements issued by the State Board of Accounts found the CIB to once again have a clean audit and no “going concern,” CIB officials reached out to the state treasurer’s office and asked them to consider a rate reduction on its state loan, explained Vane. A 1-percentage-point reduction was granted this month, bringing the interest rate to 4.25 percent, saving the CIB approximately $1 million over the life of the $9 million loan.

The CIB has until December of this year to determine if it needs the second $9 million installment of the loan, and until December 2011 to decide if it needs the third installment. The interest rates will be determined on those installments at the time the loan is granted.

“Anytime you can save the taxpayers $1 million, it’s a good day,” said  Lathrop. “We’re very pleased with this determination.”

 

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  • Ballards corporate bailout is most disgusting in history
    Can you really believe this? Closing libraries and schools while handing over tax dollars to the wealthiest family in the state- in the name of entertainment?

    I am a republican, the old non big spending type- not the types from the past decade, but the mayors corporate bailout hypocrisy has completely clouded any reasonable judgment he was supposed to have.

    This corporate bailout is the worst republican bailouts yet!

    I found a great symbolic Pacers Bailout sticker for my car: http://www.StickEmUpIndy.com
  • Questions
    Jeff, Last year's bailout legislation for the CIB included a provision that allowed the State Treasurer to loan up to $27 million to the CIB over three years in $9 million increments. The legislation does not specify the loan terms, such as interest or the repayment schedule. That leaves it to the State Treasurer's discretion to work that out. Presumably, the State Treasurer is affording the CIB a lower interest rate because of falling interest rates as of late.
  • Questions
    I'll be the first to admit that I don't understand the process by which the state loans money to the CIB. Given that, I have a few questions:

    Where does the state get the money to loan the CIB?
    How is the state able to arbitrarily reduce the interest rate?
    If the CIB "saves" $1 million, does the state "lose" $1 million?

    Can someone explain this process?

    Thanks.
    • What savings?
      Your reporting here is disingenuous, Anthony. Instead of talking about the money saved from the lower interest rate, why aren't you mentioning how much in additional interest it costs to borrow the money, which Lathrop incidentally said they didn't need at the time they took out the loan, or how the CIB plans to repay the borrowed funds or these additional operating costs the CIB is picking up for billionaire Herb Simon? I have studied the latest financials for the CIB. They are not a pretty picture at all. The debt keeps mounting and the future revenues look bleak in the near term. Short of another tax increase or another bailout for the CIB, the CIB will be facing insolvency once again in a very short period of time.

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