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It's so cool being able to say "I told you so." It's even better when you're talking about money, to the county treasurer.
Politicians and media hacks have succeeded in convincing most Cuyahogans that the Gateway stadium and arena complex has been fully funded by a combination of private investments and sin tax receipts. That was the big attraction, according to the city and county officeholders who supported the ballot issue: you didn't have to pay for this thing unless you chose to. The sin tax has achieved the status of folklore: neighbors joke about helping pay for the stadium when buying a pack of Camels, acquaintances from Summit County thank me for drinking that occassional beer, and old folks with no vices gloat about being off the hook.
Folkslore doesn't have to be true to be folklore though. Roldo's column in the current Free Times shows us how wrong the sin tax legend is. If you live or work or spend money anywhere in Cuyahoga County, the bond payments are yours, you sanctimonious non-smoking teetotaler!
You'll want to read the article yourself for the details--no point in repeating them here, and Roldo did all the research--but the bottom line is found in a state audit saying that Gateway since last December has been in "technical default." That means only the commissioner's forebearance is preventing Gateway from being completely out of cash, right now. As in closed down. Out of business.
Including all revenues, Gateway lost over $15 million in 1998. Indians revenues literally cannot get any better, since their rent is based upon attendance and Dick Jacbos gets all concession money. It's theoretically possible for the Cavs games and other arena tenants such as the Rockers to earn a few dollars for Gateway, but in reality it's unlikely to amount to much due to the sweetheart leases negotiated by Tom Chema's underqualified directorship when the complex was being built.
Both the county and the state are owed millions in past-due interest and principal payments by Gateway. So general funds are covering the lost income. That's our sales and property and income taxes, folks.
The shortfall should have been obvious to anyone with basic math skills: Gateway was going to be responsible for repayment on the bond issues but had no income of its own outside of the sin tax, which has been running at a bit less than projections. The basketball Cavs have been paying no rent at all because of some creative interpretations of the lease.
The widely publicized 50-50 split being public and private funding of Gateway never, ever materialized. All the "private" money was in the form of user fees (rent and naming rights) or short-term loans, and not much of either. Nor did the promise of 28,000 new jobs come true.
I'm especially enjoying the embarrassment this gives Jim Rokakis. While my Council rep from Ward 15, he had nothing but snide and flippant comments for anyone who questioned his 100% support for any and all Gateway subsidies. Rokakis really wanted that Finance Committee chairmanship, and knew that Jay Westbrook wasn't going to allow such a powerful post to be maintained by anyone other than a loyalist.
When I questioned Rokakis about a Gateway funding bill in Council during that time, he interrupted me to say, "You think just because most of the Cleveland voters opposed the sin tax, that it means I have to do everything possible to stop the project!" (Rokakis seems to tell me what I think rather frequently, but that's another story. One of those respect things.)
A 2-to-1 majority against the sin tax within the city might mean a lot of things, but "full speed ahead" to the Councilman from Ward 15 wouldn't properly be one of them.
State and county taxpayers need to demand that the Gateway notes be honored. Gateway, one of those barely regulated public-private mongrel corporations, will be quickly thrown into bankrupcy as it has no hope of ever catching up. (Unlike the situation with the city's well-publicized default in 1978, which really was a temporary cash-flow problem, Gateway is not just momentarily caught short but hopelessly over its head in liabilities.)
Creditors will divide what's left. Surely both state and county will get part ownership of the Gateway assets. As is frequently done in the breakup of any other business partnership, one partner, presumably the county, will want to buy out the other. Then we can return control of this publicly-funded complex to a public authority, where it should have been all along. Then Gateway will be subject to open meetings and open records laws, and Gateway management will report to either the County Administrator or the Commissioners themselves. Nothing encourages accountability like openness.
I guess Rokakis deserves some slack on the matter. Since graduating from Oberlin at the age of 22, he's never not held public office. Now over 40, Rokakis has distinguished himself in the treasurer's office mainly by not being Frank Gaul. With that lack of real-world experience, perhaps it's not so surprising that he's surprised. Businesses that plan by wishful thinking go away or get bought on the cheap.
Now he's the one who has to scramble to make the interest payments which, Rokakis himself had assured us years ago, would never, ever fall to the county. It would be better than poetic justice, except that it's the county taxpayers who are really picking up the tab.
Whether we sin or not.
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