Wednesday, April 15, 2009

Trouble with the CIB

Well folks your friendly neighborhood Capitol Improvement Board ("CIB")needs some help.

You might recall that the CIB is the quasi-government agency that runs our fine athletic facilities including Lucas Oil Stadium, Conseco Fieldhouse, and Victory Field. The problem stems from our Indiana Pacers' desire to not pony up the 15 million or so a year that it costs to maintain the Fieldhouse. Our beloved Colts convinced the CIB to cover the costs of maintaining Lucas Oil Stadium when it signed the greatest lease in the history of leases a year or so ago. It also appears that the CIB may not have computed the correct amount of money needed to maintain the "Luke." The CIB, suffice to say, is in financial trouble.

There are various proposals being floated around to address this problem. And, of course all center around raising your taxes. In this economic environment the fine taxpayers of the county aren't excited about paying more and more out of pocket.

The Mayor's office has put its two cents worth in to try to solve this problem. For the most part I don't like the proposal. My reasoning and various counter proposals on the issue now follow.

Expansion of Taxing District: I actually think this is a good idea. The plan is to have the various inn keeper taxes from the new JW Marriott hotel go towards the CIB. My problem is it doesn't go far enough. It should include additional hotels, which would in turn raise additional revenue. There are several hotels that have sprung up around Lucas Oil Stadium. Suffice to say they were not built because of their proximity to the Diamond Chain Company or the Speedway Gas Station. Because those hotels directly benefit from its location in relation to the stadium why not have the taxes collected from them go directly to the CIB?

Increase in Rental Car Fees and Hotel Fees: This is a horrible idea. For one both were already raised to build the Luke. Two, the city already has some of the highest taxes on these in the nation. This is really a "cut off your nose to spite your face" argument. Our economy depends on our town's convention business and both the Fieldhouse and the Stadium were built in part based on that business. However, we could tax ourselves out of the convention market if we continue to increase these taxes.

Alcohol Taxes: I oppose this for one reason: why should taxes be extended to those who may or may not reap the benefits from our athletic facilities? Sure one could argue simply "don't drink" but honestly, is that really feasible? Not that I associate with a bunch of drunks but who do you know that doesn't consume alcohol? I am going to guess not many.

Parking Fees: This idea is ridiculous and was proposed only by the Mayor's office. Why pass on the costs of the CIB to the average downtown worker? Do we really want to further encourage business to move to the North side of town or worse (from a taxing standpoint) the suburbs?

Colts/Pacers contribute five million dollars: Under normal circumstances I would think this would be a great idea. The only problem is it won't work. The Colts signed a legally binding document called a lease. The have no legal duty to pay anything additional other than that which is stated in the lease (unless it is modified by both parties). I assume one could argue that if it was law (that the Colts would have to pay five million dollars) then the Colts would have to pony up. But, that causes additional consequences. Is the lease still valid? Has there been a frustration of purpose? Imagine opening up lease negotiations again if the Colts go down that road. They will. A few hours after the first CIB plan was announced the Colts had already posted its position on its web site. Suffice to say the Colts aren't interested in contributing any additional money.

Counter proposal: So what the hell should we do because we have to do something. I believe that all additional taxes should be directly be levied on those who benefit from the facilities.

1.) Create an additional excise tax on all food, beverages, and clothing sold at the facilities. It wouldn't have to be anything crazy. I propose to add fifty cents to the cost of a beer, ten cents to the cost of a hot dog, a quarter to the cost of a soda, and a special additional one percent tax to all clothing sold at any of the three facilities. At least those who benefit from the facilities are paying its cost. Fifty cents on a beer is steep but it isn't going to stop most folks from having one.
2.) Use the facilities more than they are used now. Both Conseco and the Luke are used as concert venues from time to time but not enough. Conseco could actually be used for more concerts in the summer but generally doesn't try to compete with Verizon Wireless Music Center. That's a shame because attending a concert at Verizon sucks. It is too much of a pain to get there. Because there are multiple ways to get in and out of downtown that isn't as much as a problem when attending a concert there. If the Luke had two additional concerts a year (40,000 attendees) and Conseco three additional concerts (10,000-15,000 attendees) and an additional tax of three to five dollars per ticket was added, this would raise an additional half million in tax revenues. Plus, there would additional taxes raised from spending within the facility. Further, the city could bid on a few things they haven't hosted before such as the NBA All Star Game, the X-Games, or a establish a bowl game. All would increase revenues.

There is also way too much dead space at the Fieldhouse. The Pepsi Center on the top floor is worthless and not used. The Starbucks sits empty most of the time as does the bar on the first level. That space could be converted to a destination restaurant like a microbrew. This would allow additional money to be spent at the facility even when not in use.

Victory Field Naming Rights: I hate this idea but desperate times call for desperate measures. Even in this economic climate I bet naming rights would go for a million a year.

Slots: I am not completely sold on this idea and I completely sensitive to its counterpoint. Indiana depends on gambling way too much. However, it would raise significant revenues and would be a voluntary tax. I may not know many people who don't drink but I know a lot of folks that don't gamble. Plus, it would allow Union Station to be self-sufficient. Most of the tenants at Union Station are not for profits that don't pay rent. I never see the building's main concourse used. It is far too beautiful to sit idle and no one has come up with a better idea. Plus, if Union Station becomes self sufficient and an asset any money used by the city for its up-keep could go to other additional needs.

Pacer's contribution: This will work because the Pacers want to renegotiate the lease (and it contains a clause that allow them to). The Pacers should contribute something to the Fieldhouse's upkeep because that is the deal they signed. But, I do believe that they are in a tough financial situation due to the economy and attendance issues. The attendance issue is going to resolve itself because the Pacers have done a great job righting this ship. Attendance went up this year and with a team on the rise, I expect it to continue. The Pacers also have a superstar in the making. I have no doubt that the city's love affair with my beloved Pacers will return. So the city should agree to have the Pacers' contribution to the CIB to maintain the Fieldhouse to be completely contingent on the team's revenues. When they are down they don't contribute as much but when they have the financial ability to do so they do. It only makes sense.

I hope that this situation resolves itself. The Pacers, Colts, and Indians contribute much to the Indianapolis community and some of my greatest memories involve all three. But, I believe some more creative thinking outside of simply raising taxes across the board most be done to solve this problem.

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