Posts Tagged Cavaliers
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!
Jacobs-Ratner Fight Continues with Issue 3 Vote
Posted by Roldo Bartimole in Economic Development, People, Politicians on October 27th, 2009
October 27, 2009… Damian Guevara in the Cleveland Scene last week had a take on the Issue 3 that has been neglected by most, including me, but touches on a damaging game among Cleveland developers. They vie among themselves for advantage no matter what the cost to community.
It has cost us plenty over the years.
Guevara points out that Forest City Enterprises would be a winner if the measure passes. And that its rival, Jeff Jacobs, wants to stop it, making him the winner.
The battle between the two families – Jacobs & Ratner – has been going on in Cleveland for years. Neither cares much about the damage they cause the city.
“The question for Greater Clevelanders,” writes, Guevara, a former Plain Dealer reporter, “Do you trust wealthy pro-casino interests – in this case, Cleveland Cavaliers owner Dan Gilbert – to deliver on the latest promise of blue-collar and hospitality jobs, multi-million-dollar tax payments and yet another facelift of downtown Cleveland?”
I’d say no.
He calls the manipulation of the constitution inherent in a “yes” vote for Issue 3, a “deal-breaker” for many.
But the beneficiaries are clear, he notices.
“For all the vagueness of the constitutional amendment,” he writes, “there is some astounding specificity to be found in the amendment’s wording, the list of designated parcels put aside for casino construction. In Cleveland, this includes 83 acres of real estate. The Cleveland casino will, parcel-for-parcel, go on land owned by Forest City Enterprises, or the adjacent Scranton Peninsula in the industrial flats, just across the Cuyahoga river, all owned by Forest City.”
Of course, the major opponent to Gilbert’s casino desire is Jeff Jacobs, son of the late Dick Jacobs and a developer and casino operator himself.
The Jacobs-Ratner (Forest City Enterprises) battle has a long history of rivalry in Cleveland. Damaging to the city, too.
When Dick Jacobs built what is now Key Center he made it taller than Forest City’s Terminal Tower. There had been an unwritten law in Cleveland no building should be taller than Terminal Tower. That’s why the Sohio building remained shorter. They are all Public Square buildings.
Some called it developer penis envy.
When Jacobs got a special deal on the Marriott hotel, Sam Miller of Forest City demanded equal tax breaks for his Ritz-Carlton. He got it.
The biggest battle was fought over Chagrin Highlands, a plot of land more than 500 acres that the city allowed for development in 1989. Unbeknownst to anyone, Dick Jacobs was made a principal thanks to George Forbes. When Jacobs wanted to build a retail center at the same time as Beachwood Place was expanding, Mayor Michael White caused the city to sue Jacobs.
The suit stopped Jacobs’s plan; Beachwood Place, with Ratner interests, went ahead with its expansion. The suit was later dropped.
It was Jacobs vs. Ratner on the new County administration building. Jacobs sold his East 9th property to the County for that purpose while Forest City still owns its offering to the County, the mostly empty Higbee department store building.
The two factions also fought over placement of the Medical Mart/Convention Center with Jacobs winning with the location of the present city’s center.
Originally, when the plan was passed by City Council years ago for a convention center, Scranton Peninsula was its location, with Forest City promising other retail and housing development there.
So around and around these two major Cleveland forces go.
Another question to be answered is whether any principals in the deal, if passed, will be from the Ratner or Miller families. Gilbert isn’t talking about that.
Hate to make a choice on this one but I’m pulling for Jacobs this time.
Guevara’s piece can be found here: http://www.clevescene.com/cleveland/cash-of-the-titans/Content?oid=1690218