INDIANAPOLIS - Documents obtained by the Call 6 Investigators reveal private company Indiana Logo Sign Group has grossed more than $63 million since 1988, when it signed its contract with the State of Indiana, Call 6 Investigator Kara Kenney reported.
In that same time frame, the state of Indiana has received $2.75 million, and did not start receiving any revenue until 2007.
On May 30, Kenney submitted a request under the Indiana Access to Public Records Act for documents associated with Indiana Department of Transportation’s deal with Indiana Logo Sign Group.
On Monday, INDOT released more than 600 pages of records to Kenney, including financial reports that show how much revenue Indiana Logo Sign Group has earned.
INDOT could not locate annual reports from 1989, 1990, 1994 and 2007, however records show the private company has grossed at least $63 million.
"That’s a lot of money for this one company," said Scot Imus, director of the Indiana Petroleum Marketers and Convenience Store Association, after reviewing the records. "I don’t know how that contract was even accepted back in 1988."
According to the 1988 contract just released, John Isenbarger served as the director of the then-titled Indiana Department of Highways.
Someone, the name is illegible, signed for Isenbarger as well as Chief Deputy Director Daniel Novreske when the deal was inked back in June of 1988.
"I can’t, of course, speak to the prior administration that made the decisions they did," said INDOT spokesperson Will Wingfield earlier this summer. "Of course, we’re working today to manage the program the best we can."
Then Indiana Attorney General Linley Pearson also signed off on the contract, as well as William and Jane Drew with Indiana Logo Sign Group.
William Drew currently serves as managing partner and president of Indiana Logo Sign Group and has declined Kenney’s requests for an on camera interview.
Drew did not respond to an email seeking comment on the gross revenue figures.
1988 is the last time the state competitively bid the sign program, when Robert Orr was governor.
Hoosier businesses pay to be on the signs and Indiana Logo Sign Group keeps 90 percent of the revenue.
The Indiana Department of Transportation receives the remaining 10 percent of sign revenue, money that goes to repair roads.
"All that money that went to (Indiana Logo Sign Group) could have stayed in the state and could be making our roads better," said Imus. "As a taxpayer and someone who believes in good government, this is not good government at all."
Records show in 2013, Indiana received a check for $463,988.50 while Indiana Logo Sign Group grossed $4,669,285 in commercial advertising charges.
In 2012, according to financial reports, Indiana received a check for $443,786.30 while Indiana Logo Sign Group grossed $4,437,863 in commercial advertising charges
INDOT uses the money to fund operations or construction projects, including matching against federal highway funds, Wingfield said.
The Call 6 Investigators contacted all 50 states and found that in terms of profit sharing, it appears many states have better deals than Indiana.
Here are some examples:
• Michigan contracts with Michigan Logos, Inc., and the state gets 15 percent of the revenue, a guaranteed minimum return of $850,000.
• Kentucky contracts with Kentucky Logos, LLC, and the state receives 35 percent of the revenue for a total of about $677,000 a year.
• Kansas contracts with Kansas Logos Inc., and the state takes in 60 percent of collected fees, with a guaranteed payment of $1.5 million.
• Tennessee contracts with Law Signs LLC and receives about 74 percent of the gross revenue, about $778,000 per year.
• Ohio partners with Ohio Logos Inc., and the company gets a flat annual fee of $1.29 million. The Ohio Department of Transportation gets everything else, which comes out to about $5 million each year, or about 80 percent of the profit.
• The Illinois Department of Transportation runs its program on a break even basis.
• Arizona began running its own blue sign program in 2012, which was previously administered by an outside vendor for 20 years. Arizona's program took in $1.4 million in fiscal year 2013 for its state highway fund.
In an email to Kenney, Drew said the revenue sharing amount is determined through negotiations considering various unique characteristics of the individual state.
Imus and the Call 6 Investigators did some checking and found Indiana businesses pay among the highest in the country each year to be on the signs, $3,744 for four (two ramp, two mainline) signs at an interchange.
That's not counting the initial fee to create the placard.
The current contract was amended in 2011 and does not expire until 2026.
"They’re gonna have a run from 1988 to 2026, that’s a
career for most people," said Imus.
The Call 6 Investigators dug through campaign finance data and found since 1997, Indiana Logo Sign group and its top officials have donated more than $90,000 to governors, lawmakers and campaign committees, both Republican and Democrat.
INDOT points out Hoosier taxpayers did not have to invest in the logo sign program.
"This program began as one that had no taxpayer investment whatsoever," said Wingfield. "Other states have made some investments using taxpayer dollars in the past. We're receiving more than we used to."
Wingfield explained that after Indiana Logo Sign Group won the contract in 1988, the company invested in the infrastructure for the program.
"They were the ones who invested their own money to build this program up from scratch," said Wingfield. "Since it started in 1988, it's always been a privately funded program."
Records show INDOT exchanging many emails back and forth with Indiana Logo Sign Group, proof Imus said that INDOT could run the program itself.
"I think they could find someone to process an application from a convenience store who wants to be on a logo sign," said Imus.
According to a report from Indiana Logo Sign Group, the occupancy rate of their signs stands at 81 percent.
"The Indiana Logo Sign Program increased from 2,770 to 2,954 active logos, an increase of 184 logos for 2013," read the report.
As a result of the amendment signed in 2011, Indiana will start receiving more money -- the greater of $600,000 or 15 percent of the revenue -- beginning in 2017.
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