CLEVELAND, Ohio - Cuyahoga County Council members heard the first details regarding the need to renovate Quicken Loans Arena - and clearly want more information.
Council is considering legislation to borrow money for the $282 million project. They met for four hours Tuesday to hear public comments and presentations regarding the project.
County Executive Armond Budish spoke passionately about why the renovation will benefit the county and the neighborhoods.
"The Q is a critical community anchor and jobs creator," he said. "We stand a very good chance of losing the Cavaliers and the Q and the jobs at the end of the lease if we don't make this deal now. This is the reality."
See plans for the Q transformation
If approved, the plan, which involves no new taxes, will cost a total of $282 million over 17 years, with loan interest and creation of a rainy day fund.
Here's how the bill breaks down:
- The Cavs will pay $122 million for the renovations through increased rent payments.
- Cleveland will provide more than $88 million, using its admissions tax on tickets to Q events from the years 2024 through 2034.
- More than $44 million will come from the budget of Destination Cleveland, which will give up a piece of the county bed tax it receives.
- The county will provide $16 million, by dipping into the reserve fund it set up for the convention center and Hilton Cleveland Downtown, both of which are complete.
"We are pretty creative in piecing together a financing proposal for $70 million for this transformation plan without raising taxes," Budish said. "If the Cavs leave we are likely to lose the Q because we will not be able to maintain it."
Budish said the key reason he supported the deal was the seven-year lease extension, to 2034.
Council chambers was filled to capacity with more than 200 people sitting and standing. Another 60 people were in auxiliary rooms or outside the meeting room. And 33 people voiced their views -- both for and against -- for 90 minutes.
The number of those representing the building trades, who have spoke in favor of the renovation, were about equal to those who opposed the financing proposal, led by the Greater Cleveland Congregations.
Many restated views expressed a week ago when the legislation was introduced to council.
Those opposed to the current funding proposal, primarily members of Greater Cleveland Congregations, said Tuesday they are not against renovation but want an equitable investment in Cleveland neighborhoods. They asked for an independent economic study of the arena and for details on how much money the county gets from Q events and sales. They also asked council members to hold town hall meetings in the neighborhoods.
Supporters included mayors, restaurant owners, representatives of local organizations, including the Boys and Girls Clubs of Cleveland, the Greater Cleveland Sports Commission and the YMCA.
Couldn't make the meeting? Read on to see what Cavs, council members and county consultants said about the plan.
Cavs: Cavs CEO Len Komoroski told council members the arena needs to be updated so it can be more fan-friendly and attract events. He said the work -- which the Cavs have their own web site for -- has been discussed for two years.
Komoroski said construction must begin by late June so the project can be complete by the end of 2019, which would allow Cleveland to host the NBA All-Star Game in 2020.
See his presentation below or click here if on a mobile device.
Councilman Jack Schron: Schron, a Republican, wondered why the project had to be fast-tracked and approved before the county knows how its finances will be affected by the state budget, which must be approved by June 30.
Some council members are concerned about how much the county would lose under a federally-mandated change to the way Medicaid managed care companies are taxed. Estimates have ranged up to $20 million.
"What's a few more months before we spend $16 million from our budget?" Schron asked.
Councilman Scott Tuma: Tuma, a Democrat, asked if the Q has lost events.
Komorski said no but when Detroit opens a new arena at the end of the year attracting events will become more competitive.
"It is continuing to get more challenging as each new venue comes on line," he said.
Fred Nance: The attorney working for the county on the project told council the investment is needed to keep the Cavaliers in Cleveland.
"We do not operate in a vacuum," he said. "The Cavaliers are part of a national industry where there are certain economic rules of the road." He cited how larger cities with sports facilities receive more from television rights and other financial benefits.
"The Cavaliers have not threatened to leave, but neither did Art Modell," he said regarding the owner of the Cleveland Browns announcing in 1995 that he was moving the franchise to Baltimore.
Nance said Dan Gilbert may threaten to sell or move the team when the current lease expires in 2027. He said the deal would keep a critical asset in the community at a relatively modest cost.
Timothy Offtermatt: The county's financial advisor explained how the bonds would be paid and said it was unusual for the Cavaliers to pay half the cost and cover any overruns.
"That is extremely unusual, particularly in a market that has three major league teams," he said.
His presentation and documents are posted on the county's website.
Council adjourned and will meet again next Tuesday as a continuation of the same meeting.
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