City official: ‘We’re obligated’ to weigh privatizing some stadium, convention duties

The city of Indianapolis is considering ways to get out of the professional sports stadium and convention center management
business.

Yesterday afternoon, the city’s Office of Enterprise Development released a Request for Information
and Qualifications in conjunction with the Capital Improvement Board, soliciting proposals for private-sector operation of
Lucas Oil Stadium and the Indiana Convention Center.

Mayor Greg Ballard’s Chief of Staff Paul Okeson said
the city doesn’t yet know what types of ideas firms will offer, or what amount of savings privatization
could yield. The process might confirm that Indianapolis already has the best management structure in place for the venues
now operated by the CIB, he said. Or it might identify cost reductions of $500,000, $5 million, or more.

“Who knows? We may get back nothing,” he said. “But we’re obligated on
behalf of the taxpayer to find out.”

The CIB, which manages the city’s professional
sports facilities and the convention center, has struggled much of the past year to close a projected $47 million
deficit for 2010.  Last week, it said its financial situation has been improving, but still needs much work.

According to the RFI, Indianapolis hopes to identify efficiencies and cost savings for each facility; build relationships
with strategic partners; maximize their usage; evaluate potential economies of scale; and enter into a multi-year agreement
with one or more respondents for their operation.

The city’s deadline for responses is Tuesday, Nov. 24,
at 4 p.m. After that, it anticipates issuing a formal request for proposals on Dec. 7, with an anticipated due date a month
later.

The RFI requires respondents to provide specifics about how their proposals to operate the venues would
affect major city events, such as Indianapolis Colts games, national swimming competitions, the Circle City Classic, events
sponsored by Indiana Black Expo, NCAA events, events of the Indiana High School Athletic Association and various marching
band events.

It also notes that any respondent will be required to coordinate its plans with the Indianapolis Convention
and Visitors Association in order to attract and retain significant public events and ensure the facilities are utilized at
their full capacities.

It’s possible the RFI process will yield proposals the city could simply incorporate
itself at Lucas Oil Stadium or the Indiana Convention Center without hiring an outside firm, Okeson said.
He said the city also will consider the cost of any changes. Privatization might include startup expenses
that outweigh its benefits, even if it nets long-term efficiencies. And there would be a learning curve
for any firm that took over a portion of the CIB’s duties.

“We’re basically looking to this first
cut to find the marketplace’s appetite for this sort of thing,” Okeson said. “Maybe
some things will pop up it’s worthwhile for us to consider.”

The RFI does not formally
seek proposals for management of Conseco Fieldhouse, noting that stadium “is subject to an operating agreement that
does not expire in the near term.”

But it leaves leeway for privatizing Conseco Fieldhouse’s management,
if the Indiana Pacers consent. The RFI continues: “The City believes there is every possibility that the current operator
of Conseco Fieldhouse will cooperate in identifying opportunities to achieve efficiencies, enhance performance and create
benefits for the well being of the larger community.”

Okeson said the city “left the door open to Conseco
[Fieldhouse] management” because there may be areas to align it with Lucas Oil Stadium. He noted events at both venues
have similar setup, staging and breakdown costs, which might be trimmed.

“We looked
at that as an opportunity to see if there weren’t some synergies,” Okeson said.

Whatever proposals the city receives, the RFI is careful to note that it cannot interfere with or jeopardize
the tax-exempt status of bonds issued to underwrite construction of the three facilities.

Unless they’re
retired early, the Indiana Convention Center’s bonds reach maturity in June 2021; Conseco Fieldhouse’s
reach maturity in 2027; and bonds for Lucas Oil Stadium and the convention center’s expansion reach
maturity in 2041.

CIB Chairman Robert Grand said he had no comment on the RFI and also referred questions to the
mayor’s office.
Okeson said the RFI process is important for the CIB, whether it confirms what the city is already
doing or produces new ideas.
“You’re either green and growing, or ripe and rotting,” Okeson said. “One
way or another, this effort will produce results.”

Last week, CIB Treasurer Ann Lathrop said at the group’s
regular meeting that the group may not need the first installment of a $27 million state loan intended to bail it out of its
financial difficulties. Lathrop said the CIB’s financial situation might be improving enough that it may forego the
$9 million installment in 2009, which would save the CIB from paying interest charges of 5.25 percent.

State legislators
this summer authorized the CIB to receive $27 million—$9 million in annual loans the state would provide for three years—to
help close the CIB’s budget shortfall.

The CIB will decide at its December meeting whether to accept the
loan. Even if it turns down the first installment, it still could choose to accept the remaining funds earmarked for 2010
and 2011.

At the meeting, Grand cautioned that although the group’s finances are much improved, more work
remains.

“We do know we’re healthier than we were a year ago,” he said. “But the point
of the matter is, this is an ongoing issue.”