Gateway Costs Taxpayers $100 Million Plus
Posted by Roldo Bartimole in Economic Development, Politicians on February 6th, 2010
February 6, 2010… Taxpayers continue to pay dearly for the run-over costs from Gateway. Cuyahoga County sent a check of $2,493,426.93 but that was only a small portion of tax funds that now total far more than $100 million paid for bond borrowings in the 1990s.
Payments last year put the cost over $100 million; $9.7 million payment was made this January.
Similar January payments will continue annually through 2023. Go Cavs!
Dan Gilbert, Cavaliers owner, is one of the beneficiaries of this tax subsidy. You can thank Tim Hagan and Mike White mostly for this heavy subsidization of Gateway.
The full payment was $9,787,701.05.
In addition to the $2.49 million check from the County another $7.29 million came from other public sources. It includes millions of City of Cleveland tax dollars via the admissions tax and some $3 million from County bed taxes. (In this case, the bed taxes for two years were allocated in 2010.) A small part of the cost results from consultant fees.
The accounting calls for a portion of admission taxes from Quicken Arena – instead of going to the money-strapped city – to be used to pay for these bonds. Cuyahoga County originally issued bonds of $75 million and $45 million in the mid 1990s for the Gateway project. This was in addition to the sin tax, which brought in some $230 million for Gateway.
The Gateway project funding formula requires certain admission tax receipts at Quicken Arena to be used for the bond payments. The share varies from five-eighths to 25 percent of the admission taxes from ticket sales to be used to pay bondholders.
What this dramatically reveals is the huge money-maker the arena is for Gilbert.
Here are the actual figures as given by documents from the County Auditor’s office.
GATEWAY ARENA PROJECT FUNDING 2009
DATE AMOUNT FUNDING SOURCE FROM GATEWAY TOTAL 2004B Bonds Int Invoice $ Amt:
Jan 01 2009 ~ Beginning Balance 1/1/2008 $41,533,218.25.
Jan 30 2009 $84,383.28 25% of admission tax for “events” for Dec. 2008 $41,617,601.53
Jan 30 2009 $464,189.81 5/8ths of Games admission tax for Dec. 2008 $42,081,791.34.
Feb 03 2009 $1,425,101.00 Annual Incremental Bed Tax Payment – 2008 $43,506,892.34.
Feb 28 2009 $54,624.58 25% of admission tax for “events” for Jan. 2009 $43,561,516.92.
Feb 28 2009 $416,958.84 5/8ths of Games admission tax for Jan. 2009 $43,978,475.76
Mar 28 2009 $21,765.17 25% of admission tax for “events” for Feb. 2009 $44,000,240.93.
Mar 28 2009 $353,296.22 5/8ths of Games admission tax for Feb. 2009 $44,353,537.15.
Apr 28 2009 $193,366.67 25% of admission tax for “events” for Mar. 2009 $44,546,903.82.
Apr 28 2009 $418,900.83 5/8ths of Games admission tax for Mar. 2009 $44,965,804.65.
May 31 2009 $64,455.56 25% of admission tax for “events” for Apr. 2009 $45,030,260.21.
May 31 2009 $698,168.05 5/8ths of Games admission tax for Apr. 2009 $45,728,428.26.
Jun 30 2009 $66,891.90 25% of admission tax for “events” for May. 2009 $45,795,320.16.
Jun 30 2009 $536,646.26 5/8ths of Games admission tax for May. 2009 $46,331,966.42.
Jul 30 2009 $0.00 25% of admission tax for “events” for Jun. 2009 $46,331,966.42.
Jul 30 2009 $0.00 5/8ths of Games admission tax for Jun. 2009 $46,331,966.42.
Aug 29 2009 $0.00 25% of admission tax for “events” for Jul. 2009 $46,331,966.42.
Aug 29 2009 $0.00 5/8ths of Games admission tax for Jul. 2009 $46,331,966.42.
Sep 30 2009 $41,775.04 25% of admission tax for “events” for Aug. 2009 $46,373,741.46.
Nov 25 2009 $1,650,302.00 Annual Incremental Bed Tax Payment 2009 $48,024,043.46
Oct 30 2009 $17,949.30 25% of admission tax for “events” for Sep. 2009 $48,041,992.
Nov 30 2009 $69,908.17 25% of admission tax for “events” for Sep. 2009 $48,111,900.93.
Nov 30 2009 $323,458.96 5/8ths of Games admission tax for Oct. 2009 $48,435,359.89.
Dec 30 2009 $60,293.62 25% of admission tax for “events” for Nov. 2009 $48,495,653.51.
Dec 30 2009 $416,172.13 5/8ths of Games admission tax for Nov. 2009 $48,911,825.64
$7,378,607.39 $7,378,607.39
2009 Collections
Admissions (Games/Events) Tax $4,303,204.39 Chg From Prev. Yr % Change
Excess Bed Tax from CVB $3,075,403.00 $952,916.57 22.1%
Total Revenue Collections $7,378,607.39 $3,075,403.00 100.0%
The document below shows the principal and interest payment due this year with a total of $9.7 million due. The amount shown as from “StarOhio” is the result of the transfer of funds from the admission taxes and bed taxes. See document:
GATEWAY-Jan 10
Cuyahoga County Pledge Fund
Calculation of Funding required for 2010 in Gateway/Pledge Fund
Monthly interest on Series 2004B (floating rate @ 3.0459%) $4,353.10 per mo.x 12 = $52,237.19
“Bank Bond” interest @ 5.25% $76,496.88 per mo.x 12 = $917,962.50
(interest due 1st business day each month)
Interest on Series 1992A $1,509,375 x 2 = $3,018,750.00
(interest paid June 1 and Dec. 1)
Interest on Series 1994 $889,932.50 (June) $804,856.25 (Dec.) = $1,694,788.75
(interest paid June 1 and Dec. 1)
Interest on Series 2004A $68,725.00 (June) $36,125.00(Dec.) = $104,850.00
(interest paid June 1 and Dec. 1)
Principal due June 1 on Series 1994 bonds $2,315,000.00
Principal due June 1 on Series 2004A bonds $1,630,000.00
Wachovia Bank fees Calculated @ 90 bp x $1,715,000 + $19,734.25 $15,612.61
(1,715,000 x35/365 days interest @12%)
(paid quarterly Jan. Apr. Jul. Oct. 15th)
Remarketing Agent fees = $30,000.00
(paid quarterly Mar. Jun. Sep. Dec. 15th)
Rating Agent fees = $8,500.00
(paid annually in 4th quarter)
Total Interest $5,788,588.44
Total Principal $3,945,000.00
Total fees $54,112.61
Jan. 15, 2010 Grand total due = $9,787,701.05
137402 Jan. 7, 2010 Balance in StarOhio = ($7,294,274.12)
Jan. 15, 2010 Additional amount required = $2,493,426.93
That final figure is the amount of the check issued on Jan. 15 by Cuyahoga County from its general fund.
Only 13 more years to go!
JumpStart Jumping with Big Salaries
Posted by Roldo Bartimole in Economic Development, People on February 5th, 2010
February 5, 2010… We haven’t heard the next barrage of fireworks from the tiff among the Cleveland Foundation, the Gund Foundation and the Fund for Our Economic Future… but I’m wondering how much big salaries have to do with the Cleveland Foundation’s desire for more control.
The Cleveland Foundation has sliced its hefty contribution to the Fund and says it will give individually to some of the same entities funded through the Fund for Our Economic Future.
Apparently, a major issue is where resources should be most concentrated. Cleveland Foundation suggests Cleveland and Cuyahoga County is its major concern. The Fund apparently wants to focus more outside those confines to a larger northeast Ohio area.
The issue has became fodder for The Plain Dealer recently and today’s paper has three letters to the editor on the matter.
The issue seems to be one of control. The Cleveland Foundation has given some one-third of the Fund’s budget annually but it has only one vote of 70 since each contributor giving $100,000 a year gets an equal vote. The foundation has cut its usually $3 to $4 million grant to a $100,000, the entry fee for a vote.
I looked at one of the funding recipients for money going to the Fund – JumpStart, Inc., a venture capital entity – and the salaries, at least to me, are rather shocking.
The top 10 employees of Jumpstart received in salaries and benefits in the 2007-08 report, latest available, to the Internal Revenue Service $1,871,354.
The top salary went to Ray Leach, President and CEO, at $369,311 with contributions to his benefits of $34,260, or a total of $403,571.
Other top salaries went this way:
- Rebecca Braun, Chief operating officer, $178,981 with $42,359 in benefits.
- Lynn-Ann Gries, Chief investment officer, $161,482 and $42,359 in benefits.
- Dawn Redus, Chief Economic Inclusion officer, $153,397 with $37,560 in benefits.
- Richard Jankura, Chief financial officer, $143,121.
- Jerold Frantz, manager, $143,273 and $35,772 in benefits.
- Kevin Mendelsohn, Entrepreneur in residence, $120,524 with $19,297 in benefits.
- Kerri Breen, Vice president, finance, $105,837 with $19,297 in benefits.
- Tiffan Clark, Vice President, marketing, $89,126 with $21,556 in benefits.
- Remsen Harris, investment associate, $88,205 and $34,821 in benefits.
Pension benefits seem to have become an issue for The Plain Dealer as they take after public employees. I’d suggest that they look at this benefit packages for nonprofit executives. They make the benefits to public employees seem rather skimpy. Especially when one sees the salaries bestowed upon executives of nonprofits. But fair isn’t one of the attributes of our news media.
You can read about JumpStart here…
http://www.jumpstartinc.org/ForDonors/
And here’s a link to the kind of positive promotion JumpStart gets from the news media…
http://blog.jumpstartinc.org/index.php/archives/117
Here’s a link to Ed Morrison’s take that offers some good information at Brewed Fresh Daily…
http://www.brewedfreshdaily.com/2010/whats-next-for-the-future-fund-and-the-cleveland-foundation
Unfortunately, private and even nonprofit organizations are not as open to public scrutiny as public agencies. They don’t have to be so they aren’t too forthcoming. That’s why there should be more attention by the news media to philanthropic organizations than there typically is.