Suit Yourself
On Thursday, the Indianapolis City County Council Municipal Corporations Committee voted 5-3 to levy a $15 million PILOT (payment in lieu of taxes) against the Capital Improvement Board to help pay for public safety and fill a $65 million budget gap. When questioned about the legality of the action, PILOT proponent and Council Vice-President Brian Mahern said he was not an attorney. On that point he is correct, because no lawyer would ever set his client up to be sued for $15 million and lose poorly because of the flagrant violation of state statute.
Instead of adopting Mayor Greg Ballard’s budget proposal, which includes eliminating the Homestead Property Tax Credit which costs the taxpayers $13 million to administer $8 million of tax relief and for all intent and purposes has people who rent subsidizing tax relief for homeowners, the Council is moving forward with dipping into the CIB’s cash reserves. By doing this, the Council is putting itself on a track to lose a legal battle which will not only put the city in worse shape than it is now, but sets a very dangerous precedent that should scare all not-for-profits in the county.
For those of you unfamiliar with PILOTs they are used as a way for local governments to get revenue from entities that do not pay property taxes, i.e. universities and utilities. However, there are rules that local governments must follow; they can’t just levy a PILOT whenever they feel like it. Under IC 36-3-2-10, PILOTS must be treated in the same manner as taxes for purposes of all procedural and substantive provisions of law.
That means the properties under CIB control must be properly assessed, not a “cursory” assessment as what was done by the Marion County Assessor’s office, which they admitted to me in a Friday phone call. Second, and most importantly, the law says for an assessment to be valid it must have been done by March 1 of the prior year. On March 1, 2012 the CIB was exempt from taxation. Now this doesn’t mean the Council does not have the authority to levy the PILOT, they just can’t do it this year. Next year is fair game.
A more global issue that should have any not-for-profit concerned is that if the Council can do this to the CIB, what is to stop them from doing this to every hospital, university and other entity in Indianapolis from getting hit with a PILOT whenever the city feels it needs the money. I am all for a real discussion on PILOTs, especially since there is a large amount of property in the city which does not pay property taxes, per se. But doing it in this manner only creates more problems than it solves. And we haven’t even thrown in the other legal and political issues this is causing. There are rumblings that Indiana lawmakers who bailed out the CIB a few years ago are livid at the Council’s actions and some are looking at taking the CIB and its properties away from the city and putting them and their revenue under state control.
Speaking of state control, the Council may want to go back and check it’s math on the PILOT because the assessment of Lucas Oil Stadium may have been improperly included in that figure. The CIB does not own Lucas Oil, they merely operate it. Lucas Oil is owned by the Indiana Stadium & Convention Building Authority and I have yet to come across the statutory provision that allows the city to levy a PILOT against the state.
If Brian Mahern were an attorney, he would have looked at that before moving forward with this PILOT scheme, but as he admitted his not an attorney, and after looking at this idiotic scheme, not much of anything else for that matter.
