CHICAGO - The Indianapolis-Marion County City-County Council Monday approved an increase of the city's hotel-motel tax, pushing the rate to one of the nation's highest to provide funds for the county's deficit-ridden sports and convention center authority.
The measure was part of a larger state legislative package designed to bail out the Marion County Capital Improvement Board, which runs the city's convention center and sports venues and was facing a $47 million deficit.
The additional funding is considered key to stabilizing Indiana's convention industry, and state and city officials, including Gov. Mitch Daniels, have spent months debating a financial rescue plan.
The CIB's deficit is driven in part by the cost of operating the new Lucas Oil Stadium, a $750 million, bond-financed stadium that opened last summer. The stadium is home to the Indianapolis Colts and will host the 2012 Super Bowl.
The CIB also operates the Indiana Convention Center, Conesco Fieldhouse, where the Indiana Pacers play, and Victory Field.
The City-County Council passed the tax hike 15 to 14, with many council members complaining that the state had given them little choice but to approve the measure or the CIB would lose out on nearly $20 million in additional funding.
On top of the $4 million in annual revenue from increased hotel tax revenue, the CIB will now receive $9 million in state loans over three years and $8 million from sales taxes in a downtown sports district that has been expanded to include a new J.W. Marriott hotel.
With the county's 7% sales tax included, the room tax will now total 17%.
The CIB fiscal 2009 budget totaled $78 million, including $32 million for debt service payments. To whittle down an estimated $47 million deficit, the CIB board implemented $27 million in cuts, including $4 million in debt service costs on insurance payments.
Indianapolis will provide a moral obligation pledge behind the CIB's debt service account and the state will provide a secondary moral obligation pledge.
The CIB, through the Convention and Recreation Facilities Authority, last issued debt in 2003 when it sold $70 million of refunding excise tax revenue bonds. It issued $23 million in 2001 and $222 million in 1997, according to Thomson Reuters.
Some issuance for CIB facilities was done by the state bond bank and some through another entity known as the Indiana Stadium and Convention Building Authority.
