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Vote postponed on Bloomington request for food and beverage tax money, opens week-long window for possible progress on convention center expansion

cropped 12-04-2019 rice guthrie IMG_1309 — Monroe County attorney Margie Rice (left) reads aloud from some city council meeting minutes as Bloomington’s corporation counsel Philippa Guthrie looks on at the Tuesday afternoon meeting of the food and beverage tax advisory commission (FBTAC).

[Note: The timeline at the end of this piece has been updated to include links to documents released at the Wednesday, Dec. 4 meeting of the Monroe County board of commissioners.]

On Tuesday afternoon, the food and beverage tax advisory commission (FBTAC) voted to postpone for a week Bloomington’s request for an additional $2.35 million of tax money to go with the $4 million that FBTAC approved in January of this year.

Food and beverage tax money, collected since early 2018, is required to be spent on an expanded convention center and related tourism.

Between now and the next meeting of the FBTAC on Dec. 10, it looks like county and city elected officials will either clear a path forward for the convention center expansion project or likely face at least the possibility that it won’t be built in the foreseeable future.

Technically, it’s possible, though unlikely, that a capital improvement board (CIB) for governance of the project will be created by county commissioners before noon on Wednesday (Dec. 4.)

The postponed $6 million total request of the FBTAC is to pay architect’s fees for the planned expansion of the convention center. The expansion would include a new 30,000-square foot exhibit hall, to be located either north or east of the current facility at the corner of College Avenue and 3rd Street. The increased amount, which is tied to 5–10 percent of the estimated $59 million construction cost, reflects an increased cost for the expansion, and the inclusion of a 550-space parking garage in the project.

Two of the three citizen appointees to the FBTAC, Susan Bright (Nick’s) and Lennie Busch (One World Enterprises), voted for postponement. They both said as restaurateurs they’ve been collecting the 1-percent food and beverage tax for the last 18 months, and would like to see some progress on the convention center expansion. The food and beverage tax, enacted in 2017, has to be spent on the convention center.

But Busch said she wanted to make sure the i’s are dotted and the t’s are crossed. She respected the legal opinion of county attorney Margie Rice, who said there was still work to be done to get the details right. Busch joked that the county commissioners and the mayor would need to be locked in a room with Rice in front of it to get them to work out their differences, which have stalled the project for half a year.

The FBTAC will take up the matter again on Dec. 10 at 9 a.m.

Urgency: No appropriation without governance?

Adding to the urgency over the coming week are several factors:

the end-of-year deadlines set by the state’s Department of Local Government Finance for appropriation ordinances;
the need to encumber appropriated funds before year’s end;
the Monroe County council’s interest in creating some extra “motivation” for other county and city electeds; and
a concern that the four new city councilmembers, out of nine, who take office in 2020 might not support every aspect of the convention center expansion project.

All those factors could, in the next week or so, create enough pressure to yield the first significant progress on the convention center expansion project since May.

The project has been stalled over governance issues for about six months: What legal entity will make the final decision on the basic site plan, serve as the architect’s client and eventually own the expanded facility? On May 19, a nine-member steering committee concluded a public engagement process with the chosen architect, Convergence Design, and voted on a preliminary site plan, which is a northward expansion.

County commissioners take the view that the steering committee’s scope of work concluded with that vote in May. Since then the county and city executives have not been able to agree on the governance of the project.

Bloomington’s mayor, John Hamilton, who sits on FBTAC and voted against postponement, wanted a FBTAC decision in favor of the recommendation to be made Tuesday afternoon. That would have set the stage for a $6 million appropriation ordinance to be given a first reading by the city council on Wednesday night. It’s already on the council’s agenda.

County representatives on FBTAC and other county electeds, who addressed the commission during public commentary on Tuesday, were all against taking a vote on the recommendation. They said it needed to be put off until the question of project governance and oversight was settled, which they thought could be done quickly, as soon as within a week.

Equal representation finally agreed?

While the postponement could be analyzed as a loss of momentum for the city, the one-week window of intervening time could be used to patch up some remaining points of disagreement between the city and the county. Those points of disagreement involve future control of the project, and the correct statutory procedure for requesting funds from FBTAC.

Earlier in the day, Hamilton had already taken a step towards mending some fences in a letter that he sent to county commissioners and councilors.

He wrote that Bloomington agrees to “equal representation” on the board of whatever governance entity is formed to oversee the project—a capital improvement board (CIB) or a 501(c)(3). The city and county disagree about which entity should be formed. The city wants a 501(c)(3), at least in part because it does not include the partisan requirements that a CIB does, which limits the members of any one political party to four. The county wants a CIB, at least in part because a CIB has limited tort claim liability and enjoys governmental immunity.

A previous letter from Hamilton a week ago had arrived at equal representation only as a result of combining the tally of seven CIB seats with the five seats on the existing convention and visitor’s commission (CVC). The more recent letter leaves the CVC out of the mix. Previously Hamilton had floated the idea of a 6–1 or 5–2 split in the city’s favor.

Hamilton’s more recent letter also floats the idea of a deadline for the city and county to sign an interlocal agreement that would detail the collaboration between them, by December 31, 2019.

Threat of rescinding tax

A different kind of deadline came up at a meeting of the county council, which followed the FBTAC meeting in the same room of the courthouse. Councilors are keen to provide commissioners and the city elected officials some increased “motivation,” as councilor Trent Deckard put it, to resolve their differences and move the project forward.

It was the county council that had the power to enact the controversial food and beverage tax in December 2017. So some county councilors are batting around the idea of rescinding the tax, if specific progress is not made by some deadline.

Asked after the meeting about the “or else” implication of a deadline, the county council’s president, Eric Spoonmore, said he was still not eager to re-visit the question of the tax itself. But he felt it needed to be considered as a possibility, if that’s what it takes to push the project forward. Spoonmore voted against the tax in 2017.

Procedure for city council FBTAC request

During the FBTAC postponement, one of the issues that might get ironed out as soon as Wednesday night is a disagreement between the city’s and the county’s legal staff about the proper procedure for the city council to make a request of the FBTAC. A request by the city council to the FBTAC is a required statutory step in the process for expenditure of food and beverage tax funds.

The city’s legal staff want to make the statutorily required request by means of a “standing request,” which was made by the city council in May, with no dollar amounts attached, or activities specified beyond the convention center expansion project. The county’s legal staff don’t think that conforms with the statute.

The city council’s representative to the FBTAC, Steve Volan, chaired the meeting on Tuesday. Volan suggested a way around the impasse between the lawyers on the “standing request” issue. Volan asked county attorney Margie Rice whether it would allay the county’s concerns if the city council were to pass a resolution at its regular meeting on Wednesday (Dec. 4)—a resolution that makes the specific kind of request of the FBTAC that the county thinks is necessary. Rice’s short answer was yes. That kind of resolution now looks like it’ll be considered at the city council’s Wednesday (Dec. 4) meeting.

Deadlines: Legal

At the FBTAC meeting, Bloomington’s controller Jeff Underwood cautioned that the $6-million appropriation ordinance, which appears for a first reading on the city council’s Wednesday (Dec. 4) agenda, has to be enacted by the council by Dec. 16. That’s a deadline set by Department of Local Government Finance.

The public hearing for the appropriation ordinance, has to be noticed to the public 10 days beforehand—so at this point the city has almost no time to contemplate restarting the appropriation ordinance process. The public hearing and final vote on the $6 million appropriation ordinance is set for Dec. 11.

Deadlines: Political

From a legal point of view, the appropriation ordinance does not need to be approved this year. It could wait until 2020.

One reason the city wants to get the ordinance approved in 2019 was clarified at the FBTAC meeting by corporation counsel Philippa Guthrie. She responded to the claim on the county’s side that getting the appropriation ordinance approved was an attempt to move ahead unilaterally with the design process, including the decision on a site plan, which is a point of contention.

The city was not trying to move ahead with the design phase of the project, Guthrie said, but rather trying to solidify the commitment to a parking garage as a part of the project. The four new councilmembers who are taking office in 2020 might not agree on the parking garage component of the project, Guthrie said.

A lack of trust

At the meeting of the county council following the FBTAC session, county attorney Margie Rice referred to the effort to get the appropriation ordinance passed before the new council took office. “If the city administration is willing to try to slip one in by the end of the year in order to tie the hands of the next city council, what are they going to do to the county?” Rice asked. If that’s the strategy the city administration uses with their own side, “I do worry about how they’re going to operate with us,” she said.

Also a point of scrutiny at the county council meeting on Tuesday was whether and how the city is planning to pursue a contract with Convergence Design for the final plans.

County councilors don’t want the city to sign a contract with the architect for final design without the county’s involvement, even if the contract is subsequently assigned to the CIB or a 501(c)(3), whichever one of those entities is established for governance.

Mayor Hamilton’s Dec. 3 letter states: “The City will assign any design contract to the new entity when it is legally established and prepared to begin managing the expansion project.” For councilors, that looks like the city is itself planning to go ahead and sign a contract for final design. That scenario was apparently not what they were expecting to see in the text of Hamilton’s letter, based on oral communication between the city and county staff before it was sent. Rice said at the county council meeting that she has a concern that city officials will make one statement publicly, but a different one in closed-door negotiations.

A desire to have any contract that’s signed with the architect be signed by the new governance entity, or jointly by the city and county, could be a part of the formal response from county commissioners to Hamilton’s most recent letter, which will likely come at their regular meeting on Wednesday morning.

Wednesday’s meeting of the county commissioners could start a flurry of activity. Here’s a possible, but not definite timeline:

Potential Convention Center Expansion Timeline

Wednesday (Dec. 4) morning. Monroe County Board of Commissioners. Commissioners give a response to Bloomington mayor John Hamilton’s Dec. 3 letter committing to equal representation. [Updated 11:34 a.m. 2019-12-04. Link to: Statement read aloud by commissioners at Wednesday’s regular meeting.]
Wednesday (Dec. 4) morning. Monroe County Board of Commissioners. A first reading for an ordinance to create a capital improvement board could be given. (Commissioners can pass ordinances on one reading if the vote is unanimous.) No vote is expected, even if a first reading is given. County attorney Margie Rice told The Beacon Tuesday afternoon that she has a draft CIB ordinance ready. [Updated 11:34 a.m. 2019-12-04. Link to: Ordinance introduced at first reading at Wednesday’s regular meeting.]
Wednesday (Dec. 4) evening. Bloomington City Council. A resolution is passed making a specific dollar-amount request of the FBTAC for a recommendation on food and beverage expenditures. City councilmember Steve Volan and council attorney/administrator Dan Sherman started work on such a resolution after the city council’s special session on the unified development ordinance concluded on Tuesday night.
Wednesday–Friday (Dec. 4–6). Mayor of Bloomington. Response to commissioners. (Based on the Tuesday county council meeting, this is what county councilors are hoping will happen.)
Friday (Dec. 6) afternoon. Monroe County Council. Response to mayor and commissioners with a possible deadline set for specific action—which, if not met, could lead councilors to consider a repeal of the food and beverage tax.
Tuesday (Dec. 10) morning. Food and Beverage Tax Advisory Commission. The FBTA meets, considers the city council’s new resolution that makes a request, and approves a recommendation for a total $6 million expenditure for architectural fees.
Wednesday (Dec. 11) morning. Monroe County Board of Commissioners. Commissioners take action on CIB or an interlocal agreement about signing a contract with the architect.
Wednesday (Dec. 11) evening. Bloomington City Council. The council approves the appropriation ordinance for a total of $6 million in food and beverage tax money.