Posts Tagged Mayor White

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!

, , , , , , , , , , , , , , , , , ,

No Comments

MMPI Gets $1 Million Every Quarter with No Details

Posted by Roldo Bartimole in Economic Development, Politicians on November 18th, 2009

November 18, 2009… I find the way MMPI bills Cuyahoga County for its monthly “fee” an example of bad management taken to extreme. The billings tell the County nothing of what MMPI does for its healthy fee.

Here’s what the entire “invoice” from MMPI says as a description of what it did for $333,333.33 – or a penny shy of $1 million every three months:

“Const. Mgmt/Developer fee – $333,333.33. Total due $333,333.33.”

That’s it. Pretty much a blank sheet of paper.

No mention of what work might have been done. No mention of how many people did what. No mention of money paid out by MMPI. No mention of hours worked. Not a shred of documentation. Nothing. Nada.

Now that’s the way to be able to bill a client. Sweet.

Just take our word for it, says MMPI. We’ve been giving you $333,333.33 worth of service this month. And on every 15th of the month the bill comes. And we pay. Now, since March, MMPI has pocketed $2.3 plus million. So every quarter another $1 million goes from the County to MMPI on a fee basis.

You’d think that Tim Hagan would have learned the lesson from Gateway when he and Mike White allowed the construction of the arena to go forward BEFORE they got the signature of George and Gordon Gund on line to occupy the Gateway arena.

Having started construction, the Gunds had them over a barrel. And they rolled that barrel over and over again until they got as sweet a sweetheart deal as one could get. Now Dan Gilbert enjoys the same sugary deal.

MMPI, Hagan warns now, could walk away from the Medical Mart/Convention Center deal.

Wish that they would.

That $80 million or so collected on the quarter percent sale tax increase could go for better uses. Might even bring Public Auditorium to its former state.

The County also has a letter from MMPI attesting to other costs, $2,443,573 from “its pre-construction design building and various consultants for performing work on the feasibility plans, as described in Section 2.3 of the Development Agreement dated April 16, 2009, according to a July 15th letter to the County’s project director Barbara Shergalis. This is based on a request I made for documentation of billing.

The County does have backup documentation describing the different tasks that require $2.4 million in payment.

But this loose “fee” of a third of a million bucks every three months, worked out by the County and Fred Nance of Squire, Sanders & Dempsey, strikes me as the kind of an accounting that skips accounts. It allows a profit without a clear explanation of what the clients – we taxpayers – are getting for our money.

Hagan likes this kind of accounting for his friends of the Kennedy clan. The rest of us shouldn’t. It becomes more unacceptable as time goes by.

, , , , , , , , , , , , , ,

No Comments