Does Indy Need a Casino for Property Tax Relief?

The silence of our legislative leaders concerning the property tax problem gives me the uneasy feeling that they do not have a politically viable solution. When they do talk, all you hear is that "It needs more study" or "All ideas are on the table". Gibberish. They don't want to change anything.

One idea that was proposed last year by Mayor Peterson was to install tabbing machines in Union Station. That' Hoosier-talk for slot machines. I'm not sure he really wanted them in the downtown area. He was actually trying to get the legislature to give the city the power to increase local income taxes (which happened) and to consolidate all of the police and fire departments in Marion County (still trying), and he knew the Pat Bauer's and the Brian Bosma's would want to throw something out. The tabbing machines were not allowed in Indianapolis, but they did put them at the horse tracks in Anderson and Shelbyville. That was OK with everyone since most Hoosiers don't know how to get to either place.

However, a casino in Union Station is an interesting idea. It sits right in the middle of the hotels, restaurants, bars, convention center, Circle Center Mall, and both of our domes(one for the Colts to play in and one to hold Irsay's cash). It is an historic landmark that could be better utilized. It would bring in a completely new stream of revenue while filling up the the very establishments that are generating the tax revenue the city so disparately needs.

I'm sure it will attract a different type of crowd, but wouldn't you rather see someone else pay for our leader's reckless spending? I'll bet you would.

Personal Finance 101 - When to Buy a House

When I purchased my first home the week after I graduated from college, I did not have a clue what I was doing. All I knew was that I did not want to live with my parents. Don't get me wrong. I had great parents. I had been living on my own in college for four years and I enjoyed the freedom.

So why in Heaven's name did I buy a house in a neighborhood that was "in transition"?

Because my old man told me it was a good idea. That's all I needed to hear. I trusted him. He had already crunched the numbers and he knew it would be a good experience for me. After all, how big of a mistake can you make on a $15,000 house? My gross pay was $700 per month. I was loaded!

Now here is the message. I cannot believe what I've been watching and reading about the sub-prime mortgage fiasco. How could smart people deliberately loan 100 percent of the purchase price of a home at an artificially low adjustable interest rate with a monthly payment that the buyers had little chance of paying off during the life of the loan? The mortgage companies did it to make money. And they knew that there were enough people gullible enough to buy the loans on the market.

How do you avoid becoming one of the statistics? It's really pretty simple.

1. Do not buy a home unless you plan on living there at least five years.
2. Do not let your payment exceed 25% of your gross monthly income.
3. You should also have six months of your current income socked away in savings that you can access when you break your legs riding a scooter in the Bahamas.
4. And the most overlooked task is to sock away 10% of your gross income in some type of retirement account. A house isn't of much use to you when you retire if you do not have enough money to live in it.

Let's go back my first house. My monthly payment was $163.41(including principal, interest, and taxes). The payment was 23% of my gross. Check. I had no savings. However, I was allowed to borrow $18,000 because the house appraised for $23,000. So, I moved in and got a check for $3000. That was almost six months of income. Check. I told you my old man was smart. And I was actually able to save about $100(14%) per month until I met my future wife. Qualified check. But I'm sure you've all heard the story of Eve in the Garden of Eden. 'Nuf said.

As for the rest of your money, spend it!

What Does It Cost to NOT Go to a Colts Game?

Don't get me wrong. I LOVE NFL football. I just do not like to pay for it when I am not at the game. I earn the right to watch it for free when I have to endure nearly two hours of commercials for every game on the tube.

For starters, the new Lucas Oil Stadium will cost around $725 million before interest, cost overruns, and maintenance. To give you a round number, that will end up costing approximately $2 billion dollars over the next two decades. If you break that down on a per capita basis, it adds up to $1,300.00 for every man, woman, and child who is living in metro Indy.

Also, thank Bart for giving the Colts all of the revenue generated by the new stadium during Colts games and half of the parking and concession revenue for non-Colts events like the NCAA finals that will be here in a couple of years. It would have been nice to use those monies to lower our property taxes, but Jimmy needed the cash.

The Pacers received a similar deal, but it was cheap compared to the Colts. The Conseco deal is only going to cost us about $500 million. This assumes that the city will not refinance the venues. When they blew up Market Square Arena we still owed $8 million on it. Even worse, when they implode The Hoosier Dome (RCA is effectively out of business) we will owe about $46 million on a stadium the city built at a net cost of about $40 million due to the generosity of the Lilly & Krannert Endowments.

So, Indianapolis keep eating out every night. Two percent of your purchases will go to paying off the bonds while Mr. Irsay takes home the cash.

August 21st Was a Bad Day

Tuesday, August 21st, was a bad day. Why? It wasn't the stock market, it wasn't my aching neck. It wasn't even my preoccupation with our government's miserable tax system. No, today I had to fire someone.

The individual didn't lie, cheat, or steal anything. Nor did the individual violate any of what few rules we have in our small business. So, why did this person get fired?

Our industry is constantly changing. It's not important what industry we are in, because they are all changing. And the business I manage is not keeping up with the change. Is that the fault of the person I fired today? The part the employee was responsible for was the growth portion of our industry, so I guess you could say this person was given the opportunity to grow sales while other aspects of the business were declining. However, my job was to give this person the chance of winning in a competitive market. I did not do that.

I can write another thousand words explaining the woes of being in a small business and how the rules are slanted in favor of the "big guys", but the bottom line is we did not find our niche in an important segment of our industry.

So, what do I do next? First, I'm going to lunch and today I am going to live on the edge and have a beer. While I'm enjoying it, I am going to thank God that I live in the U.S.A., have a lovely wife who loves me, have three fabulous sons who just amaze me daily, and smile at the vision of my beautiful new daughter-in-law holding her newborn twins.

I guess today isn't so bad after all. As a matter of fact, it's pretty wonderful.

We're #1 - Most Affordable Housing

For those of you who are looking for affordable housing, Forbes has just ranked Indy as having the lowest median housing prices among large cities in the U.S.A. The median price of a home in Indianapolis is now $112,000 with the average household income at just over $60,000.

So how much will your payment be? Let's assume you or your rich aunt have $22,000 for a down payment. That will save you the grief of mortgage insurance which can costs several hundred dollars per year if you make a down payment of less than 20 percent. That would leave you borrowing $90,000. On a 30 year fixed rate of 7% your principal and interest would be $598.77.

Then you need to add your property taxes and that is a bit of a guess because of the current property tax mess in Indianapolis. But, let's assume the government leaves property taxes somewhere in the same range as 2006. You could expect to pay around $1800 per year or $150 per month.

Of course the mortgage company wants to make sure you have insurance, so that will be escrowed into your payment. That will add an additional $35 per month to the payment.

That all tallies up to a monthly payment of $783.77 per month plus whatever you agreed to pay back to your rich aunt (She did not get rich giving her money away).

Another important thing to remember is maintaining your home. The more you do yourself the less it will cost, but try not to burn your little love nest down trying to rewire it or falling off the roof fixing a leak during a thunderstorm. I would suggest keeping a couple grand socked away. Your never can tell when the furnace is going to crap out on you when it is 5 degrees below zero and your pipes are freezing. BTW, plumbers cost more than heating and A/C guys.

Now, the bad news is I cannot think of a neighborhood I would want to live in where the houses cost $112,000. So, double all of the numbers unless your own a pit bull and don't mind if your next door neighbor is Donnie Baker.

Homeless People

I hate to sound like an insensitive person, but homeless men are an issue that no one wants to talk about. Their presence downtown has a very negative effect. Why would the average person live or even visit the downtown when the are "afraid" of someone approaching them on the street who looks like they slept on a sidewalk last night and are asking for money?

Why does the city spend millions trying to promote downtown while they tolerate panhandlers? If the city would encourage the shelters to move just a mile from the Circle, the entire atmosphere of the downtown would be greatly improved, but these are the same politicians who have left us with the property tax mess. They are more interested in building hotels and stadiums.

It is commendable that people take the time and the effort to come downtown to feed and care for the homeless. Many of the homeless suffer from mental illness, alcoholism, drug addictions, and some are registered sex offenders. However, after the volunteers have driven back to their homes in the burbs, the men are still here and the problem is left largely unsolved. They litter the streets, sleep on the sidewalks, and one urinated on my building this morning. It is not exactly the environment that an individual is looking for when one is planning on investing in a luxury condominium.

So, the city can ignore the problem for fear of political repercussions or it can come up with long term solutions along with the property taxes. What do you think the city and we can do to help out the homeless and make the city a better place to live and visit?