Taxpayers’ Lament: Where’s Our Money?

August 25, 2008

For release Aug. 27 and thereafter (725 words)

by Andrea Neal

For a recent example of government officials playing fast and loose with taxpayer money, consider the case of the Pan Am Plaza in Downtown Indianapolis for which taxpayers should have received $6 million.

The operative word is “should.” Last year, Indy’s powers-that-be decided that the Indiana Sports Corp. need not honor a 1985 agreement that required it to maintain an 88,000-square-foot plaza as public space or else pay the city $3 million plus inflation for it. Now two taxpayers have gone to court to try and get those dollars back.

The plaza was part of a block of real estate along Capitol Avenue bought by Indianapolis, then given for investment purposes to the Sports Corp., a not-for-profit organization set up by city fathers to attract national and international amateur sporting events. This was one of Indiana’s earliest public-private partnerships.

Late last year, the Sports Corp. asked the Metropolitan Development Commission to rescind the taxpayer buyout language, which it did on a batch vote with no public input. In April, the Sports Corp. sold the plaza, which includes two ice rinks used by the public, for a reported $3.8 million to private developer KRG/CP.  The Sports Corp. pocketed the money. Taxpayers, who ironically are still paying debt service on the land, got nothing.

The transaction is disturbing on so many levels it’s hard to know where to begin. For starters, there’s the question of accountability. No elected official or elected body played any official role in the decision to rescind the taxpayer protection language. The idea originated with the Sports Corp., which had an obvious self-interest in keeping the money.

The Metropolitan Development Commission, whose members are appointed by the mayor, City-County Council and county commissioners, approved the resolution on Dec. 19 in a group of routine resolutions on a voice vote. The resolution made no mention of the fact that it would cost taxpayers millions.

Paul Ogden, the lawyer who filed the lawsuit on behalf of citizens Clarke Kahlo and Howard Elder, finds that fact especially troubling. “If they were so above board in what they were doing, why doesn’t the resolution mention those things? The fact is they didn’t want to raise red flags.”

The timing is also problematic. The vote took place a week before Christmas during the transition time between outgoing Mayor Bart Peterson and incoming Mayor Greg Ballard, who ousted Peterson in part thanks in part to property tax ire. Why wouldn’t something this important to taxpayers have been put on hold for the new mayor’s review?

Susan Williams, president of the Sports Corp., said she is certain the Ballard team was briefed on the matter.    “I asked for assurance from the Peterson administration that this had been done. I didn’t do it personally. But I was assured that that happened.”

If Ballard were briefed on the issue, as Williams was told, it’s strange that he didn’t stand up for taxpayers, especially after campaigning on a pledge for open government. But Ballard hasn’t been open about this topic.  “We are not going to comment while there is a pending lawsuit,” said his spokesman Marcus Barlow. No comment on a lawsuit that seeks to reimburse taxpayers $6 million? It seems that money could help cover the city’s projected $26 million operating deficit.

This is not an argument for letting the Sports Corp. go out of business. Since its founding in 1979, it’s done great things for central Indiana, including luring the Pan Am Games in 1987, the 2001 World Police & Fire Games and Men’s and Women’s NCAA Final Fours, to name just a few. But it’s also made poor financial decisions; the fact it had to sell off all its real estate to raise money is evidence of that.

“We need to have more public scrutiny of these public private partnerships,” says Ogden, who notes that the situation is hardly unique to Marion County. Throughout the state, similar partnerships finance sports facilities and economic development ventures with little reporting back to citizens.

Public scrutiny should be automatic when taxpayer money is involved. In its 2006 tax returns, the most recent available, the Sports Corp. reported $4.8 million in revenues and handled at least $429,488 in taxpayer money. Yes, citizens deserve to know about its operations and business deals and shouldn’t have to go to court to find out.

Andrea Neal is a middle school teacher and adjunct scholar with the Indiana Policy Review Foundation. Contact her at aneal@inpolicy.org.



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