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City official: 'We're obligated' to weigh privatizing some stadium, convention duties

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The city of Indianapolis is considering ways to get out of the professional sports stadium and convention center management business.

Yesterday afternoon, the city’s Office of Enterprise Development released a Request for Information and Qualifications in conjunction with the Capital Improvement Board, soliciting proposals for private-sector operation of Lucas Oil Stadium and the Indiana Convention Center.

Mayor Greg Ballard’s Chief of Staff Paul Okeson said the city doesn’t yet know what types of ideas firms will offer, or what amount of savings privatization could yield. The process might confirm that Indianapolis already has the best management structure in place for the venues now operated by the CIB, he said. Or it might identify cost reductions of $500,000, $5 million, or more.

“Who knows? We may get back nothing,” he said. “But we’re obligated on behalf of the taxpayer to find out.”

The CIB, which manages the city’s professional sports facilities and the convention center, has struggled much of the past year to close a projected $47 million deficit for 2010.  Last week, it said its financial situation has been improving, but still needs much work.

According to the RFI, Indianapolis hopes to identify efficiencies and cost savings for each facility; build relationships with strategic partners; maximize their usage; evaluate potential economies of scale; and enter into a multi-year agreement with one or more respondents for their operation.

The city’s deadline for responses is Tuesday, Nov. 24, at 4 p.m. After that, it anticipates issuing a formal request for proposals on Dec. 7, with an anticipated due date a month later.

The RFI requires respondents to provide specifics about how their proposals to operate the venues would affect major city events, such as Indianapolis Colts games, national swimming competitions, the Circle City Classic, events sponsored by Indiana Black Expo, NCAA events, events of the Indiana High School Athletic Association and various marching band events.

It also notes that any respondent will be required to coordinate its plans with the Indianapolis Convention and Visitors Association in order to attract and retain significant public events and ensure the facilities are utilized at their full capacities.

It’s possible the RFI process will yield proposals the city could simply incorporate itself at Lucas Oil Stadium or the Indiana Convention Center without hiring an outside firm, Okeson said. He said the city also will consider the cost of any changes. Privatization might include startup expenses that outweigh its benefits, even if it nets long-term efficiencies. And there would be a learning curve for any firm that took over a portion of the CIB’s duties.

“We’re basically looking to this first cut to find the marketplace’s appetite for this sort of thing,” Okeson said. “Maybe some things will pop up it’s worthwhile for us to consider.”

The RFI does not formally seek proposals for management of Conseco Fieldhouse, noting that stadium “is subject to an operating agreement that does not expire in the near term.”

But it leaves leeway for privatizing Conseco Fieldhouse’s management, if the Indiana Pacers consent. The RFI continues: “The City believes there is every possibility that the current operator of Conseco Fieldhouse will cooperate in identifying opportunities to achieve efficiencies, enhance performance and create benefits for the well being of the larger community.”

Okeson said the city “left the door open to Conseco [Fieldhouse] management” because there may be areas to align it with Lucas Oil Stadium. He noted events at both venues have similar setup, staging and breakdown costs, which might be trimmed.

“We looked at that as an opportunity to see if there weren’t some synergies,” Okeson said.

Whatever proposals the city receives, the RFI is careful to note that it cannot interfere with or jeopardize the tax-exempt status of bonds issued to underwrite construction of the three facilities.

Unless they’re retired early, the Indiana Convention Center’s bonds reach maturity in June 2021; Conseco Fieldhouse’s reach maturity in 2027; and bonds for Lucas Oil Stadium and the convention center’s expansion reach maturity in 2041.

CIB Chairman Robert Grand said he had no comment on the RFI and also referred questions to the mayor’s office.
Okeson said the RFI process is important for the CIB, whether it confirms what the city is already doing or produces new ideas.
“You’re either green and growing, or ripe and rotting,” Okeson said. “One way or another, this effort will produce results.”

Last week, CIB Treasurer Ann Lathrop said at the group’s regular meeting that the group may not need the first installment of a $27 million state loan intended to bail it out of its financial difficulties. Lathrop said the CIB’s financial situation might be improving enough that it may forego the $9 million installment in 2009, which would save the CIB from paying interest charges of 5.25 percent.

State legislators this summer authorized the CIB to receive $27 million—$9 million in annual loans the state would 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. Even if it turns down the first installment, it still could choose to accept the remaining funds earmarked for 2010 and 2011.

At the meeting, Grand cautioned that although the group’s finances are much improved, more work remains.

“We do know we’re healthier than we were a year ago,” he said. “But the point of the matter is, this is an ongoing issue.”
 

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  • An end of the CIB? Let's hope so..
    Could this signal the end of the CIB? What a waste of taxpayer funds. How an organization can beg for $27 million in state loans, force through tax increases, lay off staff, and then suddenly decide that $27 million may no longer be needed. Honestly, they have saved this much money some how?

    CIB Board: Make up your minds. Could anyone imagine a Fortune 500 company crying wolf so many times and still be in business.

    Privitize the CIB and get rid of the current set of idiots.

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