CHICAGO — Indianapolis’ Capital Improvement Board will vote Friday on a plan to pay the Indiana Pacers $33.5 million over the next three years to keep the professional basketball team in town.
The CIB, which runs the city’s sports stadiums and convention center, is expected to approve the plan.
City officials said the agreement is important to downtown economic development. A recent report showed that the National Basketball Association team generates $55 million in annual revenue across the region and more than 900 jobs.
“Our charge was to preserve the city’s downtown economic vitality while protecting taxpayers,” Mayor Greg Ballard said in a statement. “The agreement we’ve reached achieves this and, very importantly, involves no additional tax increase.”
The plan comes after months of negotiations between the CIB and the Pacers. The two sides were unable to reach a long-term agreement to keep the team in Indianapolis for at least 30 years, which was the original goal of the negotiations.
At issue was the cost of operating 10-year-old Conseco Fieldhouse, which is owned by the city but managed by the Pacers. The team has said for more than two years that it cannot afford the $18 million annual cost of running the fieldhouse.
Under the agreement, the CIB would pay the team $10 million through 2012 and invest at least $3.5 million in capital projects at the fieldhouse.
The Pacers would be required to pay back the money if they leave the city after the 2013 season and would not have any obligation if they stay through 2019.
“We achieved our major goals in keeping the Pacers’ huge economic impact here in downtown Indianapolis, avoiding the entire expense of operating Conseco Fieldhouse without a marquee tenant, avoiding the devastating blow to the economic development and convention business that losing the team would have created, and crafting an agreement that is within the CIB’s budget,” Ann Lathrop, CIB president, said in a statement.
The CIB is willing to take on the additional costs despite facing its own recent fiscal problems, which included an operating deficit until this year.
The board’s improving financial situation is due to a new-revenue package put together last year by the state and the city.
The new revenue includes a 1% increase in the city’s hotel-motel tax and an expansion of the board’s Professional Sports Development Authority, which allows the CIB to capture tax revenue from four hotels connected to the Indiana Convention Center. They are expected to generate an additional $11.5 million a year.
The state also loaned the CIB $9 million last year — interest payments begin in 2013 — and will provide loans to the CIB in 2010 and 2011 on an as-needed basis.
The board owns, operates, or leases Conseco, the Indiana Convention Center, Victory Field, the new Lucas Oil Stadium — home of the Indianapolis Colts football team — and related parking structures. All the facilities are located in downtown Indianapolis.