You may find this hard to believe but I am an amateur pilot. And the two main rules of flying are (1) Fly the plane! (2) Don’t crash into anything. If the city of Indianapolis were a plane and the City-County Council Democrats was flying the ship, we would be in a world of hurt right now.
This week, the City-County Council voted 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. PILOTs 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. 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. The council didn’t follow state code, and instead levied the PILOT.
Under Indiana law, the same rules that apply to assessing and collecting property taxes must also apply when collecting PILOTs. That means the property subject to the PILOT must be assessed by March 1 of the year prior to collection. So if the council was going to collect a PILOT next year, they should have assessed the property by March 1 of this year. That didn’t happen, the Marion County assessor completed the assessment earlier this month. And even that, they admitted, was a “cursory” assessment. 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.
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 its 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.
You would have thought that someone would have thought of this stuff before moving forward with this PILOT scheme.
Abdul-Hakim Shabazz is an attorney, political commentator and publisher of IndyPolitics.org. You can email comments to him at abdul@indypolitics.org.
