Scott Olson, The IBJ
solson@ibj.com
Arts and hospitality leaders expressed concern today that cutbacks the Capital Improvement Board plans to make to help address its operating deficit could hurt the city's efforts to attract visitors.
The agency that operates the city's sports stadiums and convention center is scrambling to fix its financial woes after state lawmakers adjourned Wednesday without approving a plan to generate more revenue.
The cash-strapped CIB, staring at a $47 million budget deficit next year, conducted an emergency meeting this morning to begin exploring its options.
On the cost-cutting drawing board: Renegotiating operating contracts for its venues, suspending all grant payments and potentially selling assets. It also will ask the state for help making a $27 million bond payment that comes due in September.
It was not immediately clear how much money the various tactics would free up to cover the gap. But the Indianapolis Convention & Visitors Association certainly won't receive the additional $3 million it had requested for tourism marketing.
ICVA chief Don Welsh said the CIB's financial mess could strain the organization's efforts to attract conventions and events.
"The longer this goes unresolved, the longer our competitors will hold this against us," he said today.
Legislators failed to take action on a bill that would have allowed Indianapolis to raise hotel, car rental and ticket taxes to help fund the CIB, which oversees Lucas Oil Stadium, Conseco Fieldhouse and the Indiana Convention Center.
John Livengood, executive director of the Restaurant & Hospitality Association of Indiana, reiterated his position that providing more money to promote the city would result in more visitor spending, making it a better alternative than raising taxes.
"[Welsh] needs that money," Livengood said. "Nothing can be more important than [the ICVA's] bringing visitors to the community."
Arts organizations such as Music for All and Drum Corps International complained about costs to use the facilities, particularly Lucas Oil Stadium.
Drum Corps International Executive Director Dan Acheson said he wants to hold events in Indianapolis, but is being courted by other cities.
"The competition is real," he said. "These cities want our event, but we want it here in Indianapolis. You have to resolve this."
The expanded Indiana Convention Center that is set to open late next year likely will lure more events and generate additional revenue for the CIB. But CIB President Bob Grand said the agency can't count on that happening and needs to solve its short-term financial problems.
The CIB has hired an Atlanta marketing firm to explore the possibility of selling naming rights at the convention center.
Lawmakers could reconsider the CIB funding issue when they convene in a special session to pass the state budget, but Grand said he can't wait for a decision. A date for the session has not been set.
"As we approach a special session, we want to be optimistic," he said. "However, we did not get relief [during the regular session], so that creates problems for us."
Still, whatever solution the CIB comes up with would need approval from both the General Assembly and the City-County Council.
Support for a bill faded at the state level after City-County Council members said they could not support a plan to increase taxes.
The $27 million bond payment coming due creates a time crunch. CIB members had hoped to borrow the money, but if the board needs to dip into cash reserves it could run short of money by the end of the year.
In an attempt to shore up its budget, the CIB already has made $8.7 million in cuts by reducing operating costs and the amount of funding it provides to local arts and cultural organizations. It also eliminated for one year a maintenance fund that contains $960,000 for emergency repairs to the buildings it manages.
Additional cuts could include reducing the hours of the parking garage the CIB operates on Virginia Avenue near Conseco Fieldhouse and raising its parking rates by 20 percent. Rates also could rise at lots near Lucas Oil Stadium and the lots on the former Market Square Arena site.
Still, those actions would not be enough to erase the deficit.
The CIB is facing a shortfall largely due to the additional $20 million required annually to operate the stadium, which is much larger than the RCA Dome. It also expects to absorb $15 million next year in Conseco Fieldhouse operating costs. The Indiana Pacers have the option to break their lease there after 10 years, if the franchise is losing money. The Pacers lost $1.3 million in 2006-2007 and $6.5 million in 2007-08, according to Forbes magazine.
The CIB wants both the Colts and Pacers to shoulder some of the responsibility by contributing $5 million each to help wipe out the deficit. The teams so far have not publicly agreed to the request.