State lawmakers have given their final approval to legislation that creates funding plans for most of a $360 million renovation of Bankers Life Fieldhouse and the construction of a $150 million soccer stadium for the Indy Eleven.
Senate Bill 7 provides millions of dollars in additional annual revenue for the Capital Improvement Board, which is in need of a cash infusion even without the Bankers Life Fieldhouse or soccer stadium projects.
The legislation does not create new taxes, but it does extend the life of some existing taxes that would have otherwise expired and it expands the area where the CIB collects some of its tax revenue.
Senate Appropriations Chairman Ryan Mishler, R-Bremen, authored the bill. The Senate approved the final version of the bill 44-4 on Tuesday afternoon. It heads to Gov. Eric Holcomb. The governor can sign the legislation, veto it or let it pass into law without his signature.
The bill extends the admissions and auto-rental taxes—which otherwise would have expired in 2023—until 2040 and expands what’s known as the professional sports development area, or PSDA, to include an additional eight hotels.
The existing PSDA is a mostly downtown zone that captures state income and sales taxes collected at Lucas Oil Stadium, Bankers Life Fieldhouse, Victory Field and four downtown hotels—plus the Indianapolis Colts’ northwest-side practice venue.
The CIB receives up to $16 million a year from the sports arenas and up to $8 million from the hotels. Any additional tax revenue goes to the state.
SB 7 caps the CIB’s revenue from the eight additional hotels on a sliding scale—up to $9 million in fiscal year 2022, up to $12 million in 2023, up to $16 million in 2024-2033, and up to $18 million in 2034-2041, if the properties in the zone generate that much tax revenue.
The legislation also authorizes the state treasurer to essentially lend the CIB money to make up for the revenue set to be diverted away from the agency starting in 2028. The CIB estimates that annual loan could range from $7.2 million to $20.2 million, depending on the year.
All of the funding came with a catch—the CIB had to sign a 25-year deal with the Indiana Pacers to keep the team in Indianapolis. The CIB approved that deal—worth $800 million over the 25-year period—on April 12.
As for the soccer stadium—something the Indy Eleven have been lobbying state lawmakers about for years—the bill allows up to $9.5 million annually in tax revenues to be captured for up to 32 years to pay off bonds for an outdoor stadium.
Indy Eleven owner Ersal Ozdemir has proposed developing a $150 million, 20,000-seat soccer stadium that would be part of a $550 million, mixed-use project called Eleven Park. A location for the project has not been determined yet.
The residential and commercial parts of the project would be privately funded, but Ozdemir proposed that the stadium be funded with tax revenue generated by the larger Eleven Park.
Under the legislation, Indy Eleven would have to sign a long-term agreement with the CIB and pay for 20 percent of the stadium construction costs, but the team is not required to become part of the Major League Soccer franchise, even though early versions of the bill included that requirement.
Sen. Mike Young, R-Indianapolis, who cast one of four votes against the bill, equated the bill with another bailout for the CIB. He said the state agreed to loan the CIB money in 2009 when the quasi-government agency was having financial issues, and now it's returning for more.
“It was just mismanagement,” Young said about the situation in 2009. “They were spending more money than they took in.”
Young said even though the bill mandates the expiration of the auto-rental and admissions taxes in 2040, he doesn’t believe state lawmakers will ever let that actually happen.
“This is going to go on forever,” Young said.
He also criticized the plan for still not being enough to fully fund the CIB for the next 25 years, even though that is what leaders say it is designed to do.
“Even with the passage of this bill, they’re not going to have enough money to operate,” Young said.
From 2019-2023, the CIB projects an annual average deficit of $4 million. It expects to break even from 2024-2028. But the deficit would return for 2029-2033, when expenses are projected to exceed revenue by an average of $16 million.
Sen. Greg Taylor, D-Indianapolis, disagreed with Young, saying the bill is meant to enhance the downtown sports and tourism facilities.
“This is not a bailout,” Taylor said.