More layoffs, furloughs possible for cash-strapped CIB

  • Comments
  • Print

The financial condition of the city’s Capital Improvement Board, though improving, is still dire enough that employees
of the Indiana Convention Center could be subjected to more unpaid furloughs or layoffs.

“We are looking
at it,” CIB Executive Director Barney Levengood said today of possible employment cuts. “It’s under consideration.”

Besides the convention center, the CIB operates Conseco Fieldhouse and Lucas Oil Stadium, and has dramatically
cut spending in order to balance its budget. The City-County Council is set to approve the CIB’s $63 million budget
for fiscal year 2010 at its Sept. 21 meeting.

Levengood’s comments followed questions from Kim Nicely,
a sound and light department technician at the convention center, who said “it appears to the public that the only contract
the CIB will honor is the Colts contract.”

The not-for-profit has struggled to close a funding shortfall
largely due to the additional $20 million required annually to operate Lucas Oil Stadium, which is much larger than the RCA
Dome it replaced.

The CIB early this year saved $1.1 million by slashing personnel costs. That included $615,000
in salary for 15 vacant administrative and supervisory positions that were not filled, and nearly $500,000 in temporary help
and hourly employee pay through attrition and reduced overtime. Further, it required all salaried employees to take one
furlough day per pay period in April, May and June—a total of six unpaid days.

Privatizing certain operations
of Lucas Oil Stadium and the convention center could result in even more cost savings. The city is putting our requests for
information to determine whether such a move would make sense.

“It’s an option people are looking
at,” CIB President Bob Grand acknowledged. “We feel confident we’re operating [the facilities] pretty well,
but we’re willing to take a look at it.”

The CIB has cut roughly $10 million from its budget while
struggling much of the year to close a projected $47 million deficit for 2010. Legislators authorized the City-County Council
to raise the local hotel tax from 9 percent to 10 percent, which would generate roughly $4 million annually. Another $8 million
would be generated by expanding the Professional Sports Development Area to include the new J.W. Marriott hotel.

In addition, the CIB will receive $21 million—$9 million in annual loans the state will provide for three years—to
help close the gap. The CIB is expected to draft the paperwork by Sept. 21 and submit it by Oct. 31. The CIB would begin paying
on the 10-year loan with an interest rate of 6.25 percent in 2013. If the loan goes through, the CIB doubts it will need
to dip into its $26 million cash reserve.

“We hope those dollars will be freed up to get some breathing
room,” Grand said. “We understand that financial challenges remain, but we hope to can convey a sense of positive

A part of the cash reserve could help the Indianapolis Convention & Visitors Association promote
the city and an expanded convention center. The addition to the convention center will be finished late next year. The ICVA
had requested $5 million in extra marketing dollars this year from the CIB but was rejected.

The CIB also continues
to contend with the Indiana Pacers and the expectation that the CIB will pay $15 million next year in Fieldhouse operating
costs. A contract provision allows the Pacers to renegotiate its lease after 10 years if the team is losing money. The team
contends it has lost money every year but one since moving into the facility.

Pat Early, who heads the CIB’s
compensation committee, said members continue to discuss the issue with the Pacers, although no serious negotiations have
ensued. “We continue to explore the magnitude of the problem,” Early said. “There’s been no progress,
just open discussion.” Early assured CIB members that the Pacers are not considering terminating their 20-year lease
with the city.

Please enable JavaScript to view this content.

Story Continues Below

Editor's note: You can comment on IBJ stories by signing in to your IBJ account. If you have not registered, please sign up for a free account now. Please note our updated comment policy that will govern how comments are moderated.