Want A Just City Tax- Try Admission Tax on Sports Events- Fair & Proper

The most reasonable tax for Cleveland City Council to raise income would be a special admissions tax on all events at Progressive Field, Quicken Arena, and Browns Stadium.

Why?

The reason is mainly because none of the teams pay any property taxes on their sports facilities. Not a penny.

They ride FREE.

Somehow Mayor Frank Jackson and City Council always overlook the guys at the top of the ladder. In this case, all Billionaires. How predictable.

We shall see how it makes sense.

A 10 percent added admission tax would bring in millions of new revenue. The tax would actually probably have an added benefit to sports fans. The teams would have to think twice before raising ticket prices.

So it’s likely that a major part of the cost would have to be borne by the teams and the already - if not over-paid - well paid athletes.

It would be fairer because, although the city pays the high cost of policing the sports events and takes the loss of property taxes, the fan base comes from a wide geographic area. Most likely most fans come from outside Cleveland and many outside Cuyahoga County.

They don’t share the burden of the cost of the stadiums to the city and county taxpayers. They enjoy the benefits, however.

So they should pay.

Even more to the point, the three team owners – Randy Lerner, Dan Gilbert and Larry Dolan – all come from billionaire families.

Who can afford to pay more taxes – billionaire families or an ordinary Cleveland family? It’s a trick question for the mayor and council members.

Even Mayor Jackson and Council President Marty Sweeney can figure that one out. If they want to.

If you can afford to go to games and events at these venues, built largely with government funds and advantaged with full 100 percent property tax relief, you should be willing to pay that extra charge to Cleveland.

After all, Cleveland residents feel the impact of the lost revenue from the exemption of property taxes. Some 15 percent would go to the city for its operation.

If you look at the attendance and average ticket price at events you can get a picture of how much money this could mean for the city.

The Cleveland Cavaliers had attendance in 2008-09 of 820,439, actually down from the previous season of 839,674. At an average price cited for tickets at the arena of $50, the Cavs would have attendance income of $41,983,700.

A 10 percent added admission tax would mean income of some $4.19 million in revenue for the city.

The Cleveland Browns had 578,672 in attendance (latest figures from 2006). At an average price of $55 for football tickets, it would mean revenue income of $31.8 million.

A 10 percent added admission tax would produce $3,182,696 of income for the city.

The Cleveland Indians had 27,110 in average in attendance for 80 games for an attendance of 2,168,800. At an average price of $26 for baseball tickets here, it would mean $56,388,800 in ticket revenue.

At a 10 percent added admission tax it would produce $5,638,880 for the city.

The city would earn more than $13 million in added admission tax revenue. It would produce more revenue than a garbage tax.

It would produce such revenue in a fairer manner. It would likely keep ticket price increases smaller or nonexistent.

The market will bear just so much, although sports fans seem to be unthinking consumers, paying more and more even though the teams reap huge amounts of money from television and radio and other sources. The NFL teams, for example, share some $100,000,000 (yes the zeros are correct) in revenue from broadcast and other sales of team products.

If you charged the 10 percent for ALL events at these tax-subsidized, property tax evaders, the city would earn even more money.

Doesn’t this make more sense and isn’t this fairer than taxing garbage?

Voinovich Only Absent U.S. Senator For Big Vote

Ohio’s Senator George Voinovich was the only U. S. Senator to not cast a vote yesterday on moving the historic health care bill. It didn’t make a difference since his would have been the 40th Republican vote against moving the bill to a floor vote.

Democrats had 60 votes to overcome a filibuster by Republicans. The vote was 60-39.

Voinovich didn’t want to waste time voting, as the Plain Dealer explains here: http://www.cleveland.com/open/index.ssf/2009/11/sen_george_voinovich_why_waste.html

According to a Huffington report Voinovich was celebrating at a party marking his 30 year victory over Dennis Kucinich in 1979: http://www.huffingtonpost.com/2009/11/21/sealed-with-a-kiss-dems-u_n_366626.html

Here’s a man who, with his family, has enjoyed public health by virtue of his service in various government positions at least half his life. I figure more than 40 years since he was a state representative.

Yet, he would have voted to delay health coverage to some 40 million other Americans, if he had been at the job yesterday.

But he had more important things to do.

Interest on Med Mart Tax Kicking Income Up

Cuyahoga County expects the Medical Mart fund to be at about $80 million by the end of this year. That’s a few million dollars less than expected because sale tax revenue has been down. However, that doesn’t include investment earnings that add to the fund.

The interest rate presently earned on County money is 2.97 percent, slightly down from 3.17 percent, according to investment officer Terry Maltarich of the County Treasurer’s office.

Over two years the interest earnings are expected to be $1.2 million this year, some $2.4 million over the first two years of the tax. The tax was voted by Commissioners Tim Hagan and Jimmy Dimora. Collections began in January, 2008.

County Administrator Jim Mc Cafferty? told City Council last week that revenue expected via the extra quarter percent sales tax was lower than expected. He didn’t mention that the County had invested those receipts or any resulting earned income.

Even at $40 million a year the 20-year tax should raise $800 million dollars, a hefty sum, primarily to be paid to MMPI, the Chicago firm hired by Commissioners to build and operate the Med Mart and Convention Center.

However, the sales tax is likely to produce far more than $800 million unless we never have an economic recovery.

The economic recession can be blamed for the lower than expected sales tax revenue. Lower inflation also hurts revenue derived from sales.

Over the 20-year period we are likely to have better economic times and price inflation. Both will result in higher sales tax revenue. That will likely kick the revenue on the quarter percent sale tax increase for the Med Mart above $40 million a year. Indeed, the first year’s collection totaled $42.1 million.

In addition, funds collected during this early period before construction costs kick in are being invested by County Treasurer Jim Rokakis.

So the Medical Mart fund is being enriched at some $1.2 million more than the actual collections this year, a year of slow sales tax collections. Interest rates are lower also.

We can expect higher revenue from the sales tax in coming years and more interest income until major costs of construction kick in.

MMPI has an enticing pot of gold to mine at a time when financing is difficult to obtain. This combination makes it hard to believe MMPI will leave Cleveland.

Something else is going on with MMPI’s recalcitrant attitude about negotiating a purchase of the corner properties where the Med Mart was originally scheduled to be built.

MMPI seems to be holding out for something it never should have – a building location on Mall C property overlooking Lake Erie for its Medical Mart.

MMPI should not be allowed to build on government land, particularly not on land long ago preserved for public buildings ONLY.

MMPI Gets $1 Million Every Quarter With No Details

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.

MMPI Gets More; County Spends Another $600,000 on Med Mart Deal

Cuyahoga County has paid MMPI another $1,240,799 in addition to the monthly fees of $333,333.33, according to figures from the County Auditor’s department.

The monthly fees have cost County taxpayers some $2.3 million to MMPI. As I noted earlier, MMPI collects this each month as a fee and give no details of spending for the monthly check. The added $1.2 million went for other tasks performed for or by MMPI.

In addition, the County itself has spent $611,801 of the sales tax monies collected since January 2008. The total collected as of the end of October was $74,454,985.70.

The breakdown of the County’s expenditures is $61,517 in salary, $9,839 in benefits and $540,365 in contracts associated with the Medical Mart and Convention Center project. I am seeking a breakdown of the $540,000 payments.

The three payments made to MMPI, the Chicago firm contracted with to build and operate the Med Mart and Convention Center by County Commissioners Tim Hagan, Jimmy Dimora and Peter Lawson Jones, were in the amounts of $125,185, $385,129 and $730,485, according to the County Auditor.

MMPI this week sent its representatives to Cleveland City Council after it “trashed” - in the words of the city administration - Public Auditorium and decided the original deal was off. Public Auditorium and the city’s convention center were to be part of the new project. The city and county had agreed to a $20 million payment for both.

With the Public Auditorium out of the picture, the city wanted clarification.

MMPI also dropped negotiations with property owners at St. Clair and Ontario, nearby the present and proposed convention facilities. Representatives of the property owners claim that MMPI never seriously negotiated. The property was to be used specifically for the Medical Mart.

MMPI now apparently wants to put its Medical Mart on Mall C. This is city property and long has been held sacrosanct as part of the Group Plan. Only public buildings and the Malls make up this area of downtown.

None of the Group Plan, originated in the early 1900s as Cleveland grew, would ever have been open to a private business.

Council President Marty Sweeney rushed Tuesday’s meeting with MMPI representatives. Sweeney said at the outset of the meeting that they had a deadline so that MMPI representatives could leave City Hall in time to catch a flight at about 5 p. m. back to Chicago.

One guesses that the MMPI contingent at the meeting want to make sure the meeting at City Hall wouldn’t go long, so they set an early afternoon flight back to Chicago. Mark Falanga of MMPI, however, said he would agree to a request for four more meetings with the city. One would hope that air flights wouldn’t determine how brief the meetings would be. Maybe even the public might get an opportunity to make its views known on a project that appears ready to go off track.

The “trashing” of Public Auditorium, after the agreement seemed set, has angered city officials, including Mayor Frank Jackson. It could make the use of the hall impossible as the safety of the building is now in question.

The public ought to be even more angered by the attempt by MMPI to intrude on public land overlooking the lake.

Talk of the exclusive use of this land for public buildings goes back to the late 1890s.

“According to “Daniel Burnham’s biographer, Thomas Hines, ‘The first urban reformer to exploit Burnham’s talents was Cleveland’s controversial mayor, Tom L. Johnson,’” Eric Johannesen writes in his book, Cleveland Architecture – 1876-1976. Johnson was considered a leader of the Progressive Movement in cities. Johannesen wrote, “In this (progressive) atmosphere arose the ‘City Beautiful’ movement, of which the Cleveland Group Plan was a preeminent example.

It would be more than a shame to place a trade show building amidst these government buildings.

Talk about a Mistake on the Lake. This would certainly be it.

UPDATE: More on the breakdown of the $540,000 figure mentioned above: The breakdown is as follows:

Fred Nance of Squire, Sanders & Dempsey, $175,000 for negotiating with MMPI for the County; Bricker & Eckler, another law firm for legal work \\\

$60,000; Osborne Engineering

$152,342; and Conventional Wisdom Corp., of Orlando, Fla.

$142,247 for providing the County with construction requirement of the project.

Other incidental payments bring the payments to $540,000 in contracts by the County on the Med Mart/Convention Center project thus far.

He was a 2004 Cleveland Journalism Hall of Fame recipient and won the national Joe Callaway Award for Civic Courage in 1991.