It’s a question coming to mind as a result of an item in the current issue of the Indianapolis Business Journal (IBJ). A multi-page presentation about the movers and shakers in local high finance includes reference to the "Executive Director and General Counsel of the Indianapolis Local Public Improvement Bond bank."
We hasten to point out that the following thoughts are not - we repeat, NOT - directed toward the gentleman himself. Just his employment.
We have, several times, on this website raised the question about just how much debt this city has hanging over it. There are two sentences in this article which struck a nerve.
"The Indianapolis Bond Bank is the debt-issuing and capital-financing arm of the city of Indianapolis and all municipal corporations. In his position, Kintner oversees and manages a $5 billion debt portfolio." (Our emphasis.)
We confess to being less than completely literate in financial jargon. We can’t remember hearing the term "debt portfolio" in discussions of city finances. We had to wonder whether these are the same dollars which, for decades, have been described as "investments" in "economic development" which were going to make this a world class city. A rich world class city! (Being as ignorant as we are, we’ve never considered our comparatively minuscule "investment" portfolio as debt.)
Actually, this dollar figure is rather embarrassing to us. Makes us feel pretty chintzy when raising a question about a lousy $6 million of local money for the Georgia Street boondoggle. But we’ll go ahead with our points anyway.
What is included in a "debt portfolio?" Does this include only bonds issued by the city or its "municipal corporation" segments? What about long term contracts? Is the cost of the football field included? The state is technically owner of the original debt, but is being paid by a contract with the city.
Why do we have complex set-ups like the Marion County Convention and Recreational Facilities Authority? The Authority’s annual report of 2005 includes this statement: "The Authority is organized and operated to finance, acquire, construct and lease capital improvements (principally by means of lease arrangements, whereby the Authority operates as the lessor and other political units of the city operate as the lessee, paying rent to the authority for their use.)" Does this arrangement appear in a "debt portfolio?"
What we have is simply a means of by-passing constitutional debt limits by setting up multiple agencies having separate limits but with the same taxpayers being the source of revenues for all of them. We would disagree with the courts which have approved such transparent financial shenanigans over the years.
One more question. Why is the city in the banking business to begin with? As we have previously noted, Indianapolis was not even in the original legislation setting up bond banks. These were designed to allow small units of government to couple small bond issues into a larger aggregate while seeking a better interest rate.
As it has worked out, we know how it is now being used. A recent news article pointed out that, while the TIF fund revenues being held by the Bond Bank are outpacing payment needs, no additional payments are being made. The bank is sitting on about $100 million, waiting for the next anointed developer - like the folks at No-So - to come along for their turn at this slush fund.
No doubt we’ll find many very important Super Bowl projects in coming months for which funds will somehow magically appear - out of the downtown smoke-and-mirrors.
Bingo:
"What we have is simply a means of by-passing constitutional debt limits by setting up multiple agencies having separate limits but with the same taxpayers being the source of revenues for all of them."
Hence the creation of the new sham corporation to own the sewer works.
Posted by: unigov | April 05, 2011 at 11:46 PM