Granny gather up your girlfriends, and head to Hollywood. Casino that is.
This appears to be the best – and perhaps the only -- way that Columbus and Franklin County residents can avoid an unexpected potential $97 million increase in the cost of the publicly financed Nationwide Arena, according to a Press Release by, and exclusive interviews with key members of, the Columbus Coalition for Responsive Government.
In a Press Release provided to The Columbus Free Press by Coalition spokesperson Jonathan Beard (Beard also serves as Chair of the Editorial Board of the Free Press), the Coalition reports that Ohio’s four casinos are not generating enough tax revenue to the state of Ohio to fully cover bond payments due from the Franklin County Facilities Convention Authority for that agency’s purchase of Nationwide Arena.
Ohio Department of Taxation reports show that actual statewide casino revenues have landed far from the rosy amounts originally projected. During the 2009 campaign for Ohio casinos, backers projected $1.9 Billion in casino gambling revenue in Ohio. By 2011, the state of Ohio revised its budget forecast for the casinos downward to just $1.1 Billion. And actual gambling revenues over the past 12 months have been just $868 Million. Of the state casino gross receipts tax on that amount, $10.3 million was distributed to Columbus, of which 25% is the amount dedicated to fund the City’s leasehold interest in Nationwide Arena.
The practical impact of low gambling and the resulting state tax revenue shortfall to Columbus and Franklin County residents is that a quarter of the $10.3 million received by Columbus that is dedicated to the arena lease is just $2.6 million -- not enough money to cover the $3.3 million required to cover the bond payment schedule for 2013. This has resulted in a bond payment deficit of $765,833 for 2013.
Beard says that according to public records requested and received by the Coalition, it appears as though the shortfall of $765,833 for 2013 will then be an outstanding bond amount that will be paid at the end of the loan by extending the term of the loan and making additional payments. And with the 4.875% compounding interest charged by Nationwide for the arena financing, over the next 26 years the Coalition calculates the future value of this $765,833 deferral through the 2039 projected life of the bonds would actually add $2.3 million to the lease costs billed to Columbus.
So why does Granny need to get to the slots? According to Coalition projections, if the current 23% shortfall happens in every year of the lease, the total added costs will be $97 million and a bond payment schedule that extends an additional 7 years – to 2046. The only thing that can prevent such a shortfall: we need more gamblers willing to belly up to the poker table and bet their retirement on a three-of-a-kind.
Coalition committee member Willis Brown says, “it is a shame when our public policy must be to promote more gambling so we can subsidize our sports and entertainment whims. For this deal to be exploding in the very first year of casino tax payments is frightening. We’ve got to understand why there is cause to believe gambling will increase by more than 23% next year and into the future while the scheduled bond payments are also increasing. If any deal ever needed revisiting because it doesn’t well-serve the people, this is it.”
Beard says, “also troubling is that our projections show that if these results from the very first year of the casino tax payments hold true through 2039, Columbus residents will still be paying in the year 2046 for what will then be a 45 year old arena, though the average life of an arena is just 30 years. And in addition to this old debt from 2011, there will be substantial rehabilitation costs during the life of our lease payments that will run into the many tens of millions of dollars – who pays for that? This has the potential to turn into the next generation’s version of our own generation’s Cash Burning Power Plant, where public dollars are drained by a facility that is obsolete or no longer in use. Ironically, the citizens’ petition we filed to require a public vote on the lease that is opposed by public officials may be their saving grace – the only thing that can extricate the public from the results of the decisions that officials made without the voters’ approval.”
So people, grab your Grandma, grab your Grandpa and train all the young ‘uns to know when to hold ‘em and when to fold ‘em, because sadly, we need to see a lot more people losing a lot more money for a very long time at Ohio’s casinos, if we are to avoid a publicly-financed arena fiasco.