CHICAGO - Six months after a high-profile grand opening, Indianapolis' $750 million Lucas Oil Stadium - the new home for the National Football League's Colts - is already operating in the red, officials said this week.
The stadium is expected to fall $20 million short of projections this year, according to officials at the Indianapolis Capital Improvement Board, which runs the city's sports venues and convention center. The Lucas Oil Stadium's shortfall is part of a larger deficit facing the CIB. The board said it expects a $25 million deficit in 2009 and a $45 million in 2010.
Part of the problem is the possibility of $15 million in increased costs for the Conesco Fieldhouse as the National Basketball Association's Pacers renegotiate their lease this year.
Despite the CIB's deficit, the planned $275 million expansion of the Indiana Convention Center - for which financing began last year - remains on track, according to reports.
Lucas Oil Stadium's unexpected operating shortfalls will not impact bonds issued for the project, said Jennifer Alvey, director of the Indiana Finance Authority, which financed the stadium and is providing financing for the convention center project.
The IFA sold roughly $750 million in bonds for the Lucas Stadium starting in 2005. It sold another $120 million in variable-rate bonds for the convention center expansion in August. All bonds are backed by tax revenues as well as a pledge of state appropriations.
"We build it and we bond for it then we turn it over to [the CIB] for operations," Alvey said. As for the tax revenues backing the bonds, they are "performing about as we expected them to," she said.
The IFA plans to issue roughly $155 million in bonds in a few months to finance the rest of the convention center expansion, Alvey added.
To finance construction - but not operation - of the stadium and convention center expansion, the state enacted a number of tax increases. It increased the Marion County hotel tax by 3%, the car rental tax by 2%, and the food and beverage tax by 1%.
Six surrounding counties agreed to enact a 1% restaurant tax, half of which would be used to repay debt for the projects. Excess revenue was to pay off the bonds early, not go toward operating costs, according to reports.
The stadium is expected to generate just $7.7 million this year, according to local reports. To deal with its deficit, the CIB board voted Tuesday to cut 8% from the operating budgets of all venues, freeze salaries and hires, and ban travel.
The CIB runs the Lucas Oil Stadium, the Indiana Convention Center, Conesco Fieldhouse, and Victory Field. The board also provides funding for the Cultural Development Commission, Arts Council of Indianapolis, Indiana Black Expo, and Indiana Sports Corp.
In related news, Indianapolis Mayor Greg Ballard this week proposed a sweeping consolidation of city-county government in a move that would give the mayor significantly more power over local agencies, including the Capital Improvement Board.
The plan would eliminate township governments across Marion County and give the mayor control over so-called poor relief, all tax assessment and collection, and board appointments to a number of systems, including the CIB. Many of the mayor's suggestions come from a recent report on how to consolidate state government, parts of which Indiana Gov. Mitch Daniels is expected to begin to try to implement this year.
Ballard would combine the offices of assessor, auditor, controller, and treasurer into one position that he would appoint. Critics said the move would give the mayor too much power.