A change made to legislation designed to boost funding for Indianapolis' Capital Improvement Board means the quasi-governmental agency could reap an additional $15 million in tax funds annually—nearly double what was initially proposed to help support sports and hospitality projects.
Senate Bill 7 initially could have generated an additional $8.5 million for the CIB by extending the life of multiple tourism- and entertainment-related taxes, expanding the footprint of what’s known as a Professional Sports Development Area and increasing the amount of revenue the CIB could collect from the PSDA.
But an amendment approved by the Senate Appropriations Committee on Thursday morning would mean the CIB actually could collect an additional $15 million per year.
The CIB, which owns Bankers Life Fieldhouse, Lucas Oil Stadium and the Indiana Convention Center, already receives $169 million annually—80 percent of its revenue—in state and local tax dollars that it uses for operations and to pay off bonds for buildings.
Some comes from the PSDA, which is a zone mostly downtown that captures state income and sales tax revenue generated at Lucas Oil Stadium, Bankers Life Fieldhouse, Victory Field, the Indianapolis Colts’ northwest-side practice venue and four downtown hotels.
Tax revenue from the sports venues within the PSDA is currently capped at $16 million, and tax revenue generated from the four hotels in the PSDA is capped at $8 million.
As initially presented, the bill would expand the PSDA to include the two Hilton-branded hotels that have been proposed in conjunction with the planned convention center expansion at Pan Am Plaza, as well as the 316-room Hyatt Place/Hyatt House that is under construction on Pennsylvania Street across from Bankers Life Fieldhouse, starting July 1. The annual tax revenue the CIB would receive from the additional hotels would be capped at $7 million annually.
The original bill also would have allowed the CIB to collect an extra 20 percent beyond all three of those caps, starting July 1, 2021, but the amendment approved by the committee on Thursday removed that provision.
Instead of allowing the CIB to split that excess revenue with the state, the bill now expands the PSDA even more to include several areas within a 2-mile radius of Monument Circle.
That new area includes four hotels—the Conrad Indianapolis, the Crowne Plaza, Embassy Suites and Omni Severin—and bill author Sen. Ryan Mishler said state and city tourism leaders expect more hotels to be built in that zone.
The amendment would allow the state to collect the first $6 million generated in this new area of the PSDA, and the CIB would receive the next $8 million, with a total cap of $14 million. The state would receive any revenue generated beyond the cap.
The bill also would allow the CIB to continue receiving revenue from an auto-rental tax and admissions tax through February 2038. The auto-rental tax, which generated $7.2 million for the CIB in 2017, and the admissions tax, which generated $15.1 million in 2017, will otherwise both expire by the end of 2027. Extending those taxes would require action by the Indianapolis City-County Council.
The CIB, with cooperation from Indianapolis Mayor Joe Hogsett’s administration, has been working with the state’s key budget writers for months to find a way to replace the $8 million per year in operating revenue that it plans to redirect to pay off bonds for the proposed $120 million expansion of the convention center. Plus, the CIB is looking ahead to future projects, such as renovating Bankers Life Fieldhouse.
All the extra revenue the legislation would generate has a catch: The CIB and the Pacers have to sign a new, 25-year agreement by April 1. The Pacers’ lease at the fieldhouse expires at the end of 2024.
The amendment approved Thursday also throws in another caveat to give the state some control on the CIB—two of the positions on the board would be appointed by the governor rather than the mayor of Indianapolis and the Marion County commissioners.
The nine-member board currently has one position appointed by the county commissioners, one from the City-County Council, six from the mayor and one person from the surrounding counties that pay into the stadium tax.
“We kind of feel we’re starting to have a significant investment in some of this and the state should have some representation on the CIB board,” Mishler said.
The bill, which also now involves potential funding for an Indy Eleven soccer stadium, moves to the full Senate for consideration.
Taylor Schaffer, Hogsett's deputy chief of staff, said that although the mayor's office was still analyzing the full effect of the amendments adopted in committee, "we are encouraged by the unanimous vote to move these critical issues forward."
"This level of support indicates strong momentum behind ensuring that the CIB continues to be a sustainable economic engine for the state for decades to come, without burdening residents with new taxes or fees," Schaffer said.