The Indianapolis Capital Improvement board likely will accept a state loan providing $27
million over three years to help shore up its fragile financial situation.
Members of the not-for-profit that operates the city’s professional sports venues and the Indianapolis Convention Center will vote next month on whether to accept the assistance, or risk losing the initial $9 million installment this year.
“We ought to go ahead and borrow it,” CIB Treasurer Ann Lathrop told the board Monday afternoon.
Lathrop last month hinted that the organization’s bleak financial situation had improved to the point that it may not need the initial $9 million, which would save the CIB from paying 5.25 percent in interest charges.
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 expects to improve its finances by making $26 million in cuts this year. It also is poised to collect roughly $11 million more in annual revenue, and it avoided payment on $25.5 million in debt-service reserve payments.
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 Conseco Fieldhouse operating costs.
A provision that allows the Pacers to terminate their lease after 10 years could trigger additional costs under a renegotiated lease. An agreement has yet to be reached, although CIB officials continue to negotiate with the team, CIB Vice President Pat Early said.
“We’ve done nothing to deal with Conseco Fieldhouse yet,” he said. “One way or another, that may require money we don’t have in the budget. We still haven’t resolved all the open issues.”
Also, Lathrop told members the additional revenue the CIB will capture from an expanded Professional Sports Development Area is falling short of projections.
Lawmakers last session approved the expansion, which was expected to generate $8 million in sales taxes next year generated within the area that includes the new downtown J.W. Marriott hotel.
But Lathrop said the figure will be closer to $6.6 million, largely because occupancy during the economic downturn has fallen at the downtown Westin and Hyatt hotels, which also are within the tax district.
“I don’t think this is cause for panic, but I did want to reflect on what we’ve found so far,” said Lathrop, who expects the CIB will capture the full $8 million when the J.W. Marriott opens in 2011.
The General Assembly also approved a 1-percent increase in the innkeepers' tax, allowing the organization to capture an additional $3.4 million in annual revenue.
The extra tax money, as well as $26 million in cuts the CIB has made this year, has helped it to erase the $47 million deficit.
In addition, the CIB avoided paying $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.
Meanwhile, if the CIB accepts the state loan, its cash reserve could grow to $38 million in 2011.
In other CIB news, members on Monday agreed to support the CIB’s bid for Indianapolis to host World Cup soccer games in 2018 and 2022, if the United States is selected as a host country.
The 27 U.S. cities vying for the games will be cut to 18 next month. If chosen, Indianapolis would most likely host a preliminary pool-play round.
Most sports economists agree that even a preliminary round of the World Cup could carry an economic impact similar to an NCAA men’s basketball Final Four. Studies show that direct visitor spending for a Final Four is between $45 million and $50 million.