ROLDO: How the Rich Get Richer and Richer

By Roldo Bartimole

No one noticed. No one pays much attention. It’s only public money.

The County sent a check, as it does each January 15, to bondholders for the 1990s Gateway bailout.

We’ll see this week how it has added up substantially. The latest payment means Cuyahoga County taxpayers have sent $116.8 million to bondholders since 1992 to pay for Gateway overruns.

It doesn’t even make a ripple in the public consciousness. That’s because our main source of information is the Plain Dealer. And the Plain Dealer doesn’t care. It’s too worried about team owners and what they might think. It’s had a blackout on the truth about Gateway for years.

I’m going to try to compile as much of the cost the people of Cleveland and Cuyahoga County have sunk into providing sports to fans, whether they want it or not.

On Jan. 15, 2012, as it has since 1992 and will until 2023, Cuyahoga County sent a check to bondholders — this time for $5,091,820.46 for debt on Gateway. The County has to pay bondholders each year for bonds it let in the 1990s for cost overruns at Gateway.

It was a bailout before bailouts became popular.

As we near 20 years after Gateway was built — and still paying for the damned thing — the rumblings are that — just as Browns Stadium — big improvements for big dollars are going to be needed at Progressive Field.

The thievery continues. No one is paying attention.

In total so far, the County itself has paid $116,846,082 on bonds for Gateway overruns, mostly at the arena. The Gunds, owners of the Cleveland Cavaliers at the time, insisted on extras that drove up the costs. What did they care? They knew they wouldn’t pay for it.

Other payments have been added to the $5-million from the County. The city was obligated to commit admission taxes and county hotel/motel revenues to help pay.

Every dish had goodies for the sports moguls. They consume freely.

The two teams, which enjoy use and benefit of Gateway property, have not paid ONE PENNY of this cost. Not one cent. Isn’t it always that way.

This article, however, is about more than a single year payoff to our sports moguls, all three now of billionaire families.

These are the 1 percent guys. And they live off us.

And what are the media and fans concerned about? A tweet calling the Browns owner “pathetic.” My, what a pathetic barometer.

As part of this examination of how well we’ve treated these billionaires I’ll examine in detail how the three sports facilities — a baseball field, a football field and a basketball arena — have been financed. Bear with me.

The $116-million debt results from cost overruns. The involved bonds – $45 million and $75-million – were not approved by the County voters. The debt was laid on us by Commissioners Tim Hagan, Mary Boyle and Jim Petro. It took them one meeting of 30 seconds. They were such dependable office-holders for the city’s richest.

Here’s a little vignette from those days when I questioned whether the taxpayers should bear the entire cost of overruns or should the teams also contribute. I questioned Commissioner Jim Petro at a public meeting:

Roldo: Did you ever ask them (team owners) to back up the bonds themselves with other revenues coming out of those publicly subsidized facilities?

Petro: That question, I don’t know if it was asked.

Roldo: Why wouldn’t a question like that be asked. They are the ones who are benefiting from it.

Petro: I’m not going to keep debating with you, Roldo. We asked a lot of questions.

Roldo: Well, I want to know if you asked that question because that’s the crucial question.

Petro: Roldo, you’ve got all the answers.

Roldo: No, no. That’s the question that needs to be answered. But one that you don’t want to answer because you’re a politician and you just want to wave it off.

Of course, Hagan, Boyle and Petro weren’t going to ask the teams to share any of the burdens. They had the taxpayers only in mind.

They had run out of money to pay for Gateway – the baseball field and basketball arena.

The latest check sent by the County was for $5,091,820.46. It comes from the County general fund, the money supposedly used to operate the County.

(You may notice that County Executive Edward FitzGerald is now letting out more bonding of $100-million to be used in private deals. The PD loves him for it. So will all the developers who provide campaign donations.)

The Jan. 15th payment of $5-million was only a partial payment, however. The total due to bondholders was $8,965,323.16.

So another $3,873,384.98 came from other sources.

The other sources were also all public monies. Not one cent came from either Larry Dolan, present owner of the Cleveland Indians or Dan Gilbert, present owner of the Cleveland Cavaliers. They simply enjoy the profits of this public generosity.

The extra $3.8 million came from taxes intended for other purposes. The city used admission taxes and county the bed taxes on hotels/motels. Bed tax money provided $1,431,854.00 and city admission taxes provided $2,420,524.05. A small amount, some $21,000, came from interest earned.

The money-strapped City of Cleveland (wonder if the fire, police and other city unions realize this) has paid $38,238,347 of this debt. Yes, that’s $38 million. It comes from admission taxes that could be used for so many other city needs and services. These payments by the City of Cleveland have been made since 1995 and will continue until 2023.

Another source, the County bed tax has been hit up for $8,610,471.

Some other sources have also been used, including excess sin taxes for $8,811,732 and a category simply called “other” for $21,333,047.

THE TOTAL COST OF THE GATEWAY BAILOUT: $193,839,679. So far.

That’s a hell of a lot of money. And we have 11 more years to pay.

I reiterate – nothing came from the teams which reap the benefits of the sports facilities.

Unbelievably, Hagan and Mayor White also made sure that these expensive buildings would NEVER pay property taxes.

These properties are also fully property tax exempted. So the city and county, but especially the Cleveland schools, have lost tens of millions of dollars because of the tax exemption on these structures.

In fact, team owners from Dick Jacobs to Dolan, from George and Gordon Gund to Gilbert HAVE NEVER PAID ONE PENNY OF THIS DEBT on the facilities they enjoy. They also escape property taxes. Isn’t that nice.

In addition, County taxpayers also paid some $240 million in sin taxes for Gateway. The sin tax continues to be collected at nearly $13-million a year to pay for other sports facility bonds for the Browns stadium. These bonds will need public funds to 2023.

The County also has paid other borrowing costs for Gateway.

– County taxpayers reimbursed the Cleveland Foundation $2,097,490 for debt owed by Gateway to the foundation.

– County taxpayers paid $11,500,000 from the general fund to pay cost other overruns on the arena.

– County taxpayers further paid $3,750,000 thus far to reimburse the State of Ohio on a $10-million loan, paying some $250,000 annually. Another payment is due in March. (The City of Cleveland pays the same $250,000 amount annually and also has paid $3,750,000, same as the County thus far.) These $250,000 payments from both the city and county will end in 2016, a duration of 20 years. Anything for our sports moguls. That’s five more payments of $250,000 each from the city and county for another $1,250,000. Go ahead fans, get angry about the demotion of Tony Grossi. That’s not the most important event that is happening in sports, folks.

Then taxpayers actually voted to pay more via the sin tax to bring the Browns back. How are you liking that, as the saying goes?

Further, the Browns are now demanding a $5.8-million advance on capital improvement dough for the football stadium. The Plain Dealer thinks the idea as thrilling as it has in the past. Here’s what the PD said about the Gateway bailout: “The arena is far too along for the commissioner to do anything other than give the additional fund to complete the project…” the PD editorialized in the 1990s. Would you expect anything different?

Anything you want, Big Guys.

So enjoy, Dan Gilbert and Larry Dolan. No foreclosure or debt retriever will ever bother you. Just ask and you shall receive.

These guys will take from any pot they can find with the help of our politicians. And if there isn’t a pot, it will be created.

That brings us to costs of the remaining sports facility – Browns Stadium.

In March of 1996 I began an issue of Point of View, a newsletter I published at the time, with this paragraph:

“Cleveland city council had an extremely difficult time but barked up a new football stadium despite four days of testimony that make it clear to anyone with half a brain that the one-sided deal was bad for the city.” (Mayor Frank Jackson, by the way, voted against the Browns financial deal. I bet he won’t this time.)

I can now say – and will – more than 15 years later, I told you so.

I described the financial action by Council this way:

“The revenue from taxes- on parking, added admission tax and car rental fees – enacted by city council last June plus the sin tax 10 year extension funds voted by county residents in November allow for $470,550,000 in payments to cover the $150 million financing of construction, interest and capital reserve with a payment of $2 million a year for 30 years for extracurricular school activities, a sop to the school children who the same week saw action to lay off 700, including more than 300 teachers, for lack of funds.”

But, of course, that wasn’t enough.
– The State of Ohio pitched in $33-million.
– The city’s utility department gave $6-million in work contributions.
– The Regional Transit Authority (RTA) pitched in $3-million.
– The NFL was to fund, depending on the cost of the stadium, $28 to $48 million.

And the city built two money-losing parking garages for some $40 million. And there was always the thought that Mayor White had other work done by city departments with the city picking up the costs.

No one could ever put a true cost of the Browns Stadium. We still don’t know what the total cost. We never will. All thanks to Mayor White. No wonder I described White then as one who would make a great Pharaoh. He WAS the Pharaoh of Cleveland.

Here’s an accounting of Gateway bailout payments:

COUNTY OUTLAYS
Arena Bonds $116,846,082
Repay Cleveland Foundation $2,097,490
Payment to Contractors for overruns $11,500,000
Repay State loan $3,750,000
Incremental bed tax $8,610,471
Excess sin tax $8,811,732

CITY OF CLEVELAND OUTLAYS
Admission tax $38,238,347
Repay State loan $3,750,000

I hope interested parties will make a copy of these facts and keep them in mind when next the cry of the Greater Cleveland Partnership, the Browns owners and the Plain Dealer say WE JUST HAVE TO HAVE MORE MONEY FOR OUR SPORTS FACILITIES. But don’t say, and you will have to pay for all of it.

 

He was a 2004 Cleveland Journalism Hall of Fame recipient and won the national Joe Callaway Award for Civic Courage in 1991. [Photo by Todd Bartimole.]

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