From Indy Tax Dollars:
Readers will remember a recent post we called "Untitled" because we chose not to use profanity. Yesterday's front page headline - "City's sports venues in the red" - has us sputtering again.
The Capital Improvement Board (CIB) compares to a group of school children - primary grades - who spend all their money in a candy shop then are bewildered that they don't have money for the bus ride home. (Or maybe it was planned. "The building is there. We can't just let it stand idle.")
How is it possible that educated adult men and women did not consider the fact that a much larger building, with a much more sophisticated type of operation, was going to cost more to run. And do they really think the taxpayer ought to be on the hook because the basketball team has a lousy season?
The following is a partial repeat of a post we made two years ago on how to handle costs..
We suggest a variation on the TIF approach, which we would call RIF, that is "Revenue Increment Financing." Here's how it would work.
Some time ago advocates of the stadium/convention center project told us the deal would bring into the city an additional (incremental?) $2 billion over a 10-year period. That's $200 million per year of new money.
We believe it is a fair assumption that the original impact of at least 75% of that money would be at the level of downtown service/retail, for-profit commercial businesses in a definable area focused on the stadium. That area would be determined to be an RIF district.
We already know how to set up such districts for sales and income taxes. If the CIB could get its act together to provide accurate future expenditure estimates, it should be a simple matter to determine a share of these expenses to charge to each business in the specified district. Per our assumption above, a base amount of $150 million, the cost to each of these businesses surely would be a modest amount, particularly when considering that every other business and individual in the city is already subsidizing them.
After all, under TIF, the entire property tax increase is diverted from municipal funds.
There is one caveat. Our proposal assumes that the $2 billion estimate of revenues is somewhere near the truth.