My biggest concern today, as we head into the weekend, is that Cleveland City Council as a legislative body, will likely not take the time needed to conduct what I believe should be thorough due diligence. Secondly, apart from due diligence on this specific legislation, there has not yet been proper due diligence and public discourse on the proposed (by the Mayor and Browns this week) renewal of the sin-tax. It is my believe that without a full review of the total future legal and other anticipated obligations for all three pro-sports facilities, there should be no agreement for any new obligations for additional payments for any of the facilities. Some initial questions:
- What is the legal case for the City entering into agreement to take on these additional repairs and improvements?
- What is the urgency for this to be considered and passed under emergency ordinance? I’ll be asking Monday to delay any such vote until after the new year. To be asked to approve within less than two weeks from when the Brown’s proposed this, and only a week before a holiday is unacceptable given the fact that it represents an additional $30 million in obligations to the City’s General Fund and other changes to the current lease.
- What is the make of the Brown’s current and propose jumbotron scoreboard(s)? The current is claimed to be only several years away from being obsolete or unable to obtain replacement parts? This is related to the above question of urgency and for some form of confirmation of the actual cost of the new replacement board – stated by the Browns to be $20 million.
- Why would the City concede control and direction of any future increase in admission tax as is being proposed? This in fact begins to tinker with the existing lease, which the Mayor’s Administration stated was not to occur.
- Has there been any consideration or financial models developed to explore other sources of revenues such as increasing the admittance tax, increasing the City’s income, food and beverage or other such taxes or fees?
- Why is the Mayor proposing to pay the $30 million new obligation from the General Fund as opposed to some other source more appropriate for capital investment, i.e., bond or other fees or taxes. The $2 million/per year for 15-year obligation is unprecedented and too onerous to place on future administrations and Councils.
These are only the immediate questions and should help in getting the conversation started. NOTE:
There has been some confusion as to what the deal actually represents as pertaining to the current obligations the City has and how this deal would change those obligations. The underlying lease and therefore this deal are very complicated. Here is an attempt to explain the deal and its implications. The City would commit $30 million in the form of $2 million payments per year for 15 years. Although both the Administration and Browns take pains to state the obligation is worth only $22 million, given the present value of the obligations, in fact, if paid annually, the City will be paying out $30 million. The only way this could be spun as a $22 million dollar contribution and not $30 million is if it were paid today! This $30 million represents payment for: $20 million jumboTRON scoreboard (check out the Houston Texans’ new $16.5 million 277-foot-long video board
); $5 million new sound system; and $5 million control room. In addition, in our briefing earlier this week the following expenditures were also discussed: field lighting $3 million, ADA improvements $3 million, and painting/carpeting $7 million. Also, part of the deal is allowing the Browns more control of what and when $12 million is spent on capital repairs. The City is proposing to give the Browns more control for spending earlier (beginning in 2016) $12 million. This $12 million is part of approximately $24 million currently available from collections of the sin-tax. The confusion in some media reports and on-line blogs and comments sections is that the $2 million annual payments for 15-years ($30 million), would off-set future payments of capital repairs as detailed in the remaining payments listed above in what is called the Lease Agreement’s Schedule 14(f). This is not correct. The proposed contribution from the City of $30 million is in addition to the current $39,450,000 Capital Repairs that we are obligated to pay. This will bring our total obligations to $82,500,000. And, people seem to forget or not mention in these reports that the City still owes some $134 million in principal and interest on t he initial $202 million in municipal bonds that were issued to pay for the $330 million stadium. It is correct, that by giving more control over the proposed $12 million (so that it could be spent as early as 2016) would reduce the balloon payments that start in 2021. But, it is also true that by moving these payments up the City would forgo some $1 million in interest (this is the flip side of the future value of money argument). There is a lot more information and things that should be considered, not the least being how much are the obligations for debt and maintenance on all three pro-sports teams? The obligations, both legal and anticipated that would need to be covered by a renewal of a sin-tax or to be covered by some other form of funding. In January, I began my research into this issue and the information developed is available on my blog at the following links:
I look forward to hearing other’s perspectives and opinions on these important issues, and what actions can be taken to increase public education and public discourse. Brian CumminsCleveland City Council, Ward 14
[See link for a copy of the Browns Stadium Lease Agreement and Ordinance #1578-13.