GATEWAY NOW COSTS TAXPAYERS MORE THAN $100 MILLION EXTRA

Submitted by Roldo on Fri, 02/05/2010 - 21:50.

 REVISED POSTING:

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-Jan10

 

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!

 

 

 

 

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