The following was published in the February 8th issue of the Toledo Free Press.
At the State of the County address, I learned – along with the rest of the public – that the Lucas County would like to take over the arena project. The proposal is to hire Gateway Consulting to do a fiscal plan, site selection, garner public support, and develop an action plan for moving forward.
First, we already have several plans, so why do we need a new one, especially at a cost of $12,000/month? Second, the citizens of Toledo have already decided on a site. While my personal preference is not to put an arena on our prime waterfront property, I support the public’s decision to put it in the Marina District. Any change in location should go back to the voters for support.
Third, a new arena is not the same as 5/3 Field. The Pizzuti Companies recommend that a non-profit board be established to “own and manage” an arena – similar to the set up for Seagate Convention Center. Seagate receives significant public funding from the hotel/motel tax and they still cannot live within their budgets, requesting, annually, a quarter of a million dollars from the County’s general fund to help make ends meet.
Finally, an action plan already exists. It calls for more “partners” to help fund the costs, more financial support from federal and state governments, and suggests an additional tax in Lucas County to generate the revenue to pay for a new stadium.
Given these factors, what will another study do, except tell us what we already know?
So let’s look at the fiscal realities. The cost estimates for a 10,000 seat arena range from $61.5 to $78.3 million. By the time you add in site acquisition and even a parking garage, the total comes to somewhere between $73 and $126 million.
When it comes to commitments, the City of Toledo can only provide $5 million either in direct construction costs, if built in the marina district, or in infrastructure support, if built downtown…that pesky little section 79 of the City Charter getting in the way.
The State has committed $7.5 million, but this, too, is site specific in the marina district. To spend that money in another location would require either a waiver by the State Controlling Board or a change in the enabling legislation.
A financial report from Pizzuti, shows that the facility will have about $400,000 to apply to debt each year – this means that the operating income can support bond financing of only $6.7 million. Add these three commitments together and you get $19.7 million available for the arena – which means we’re still short between $53.3 and $106 million.
Some entity must be able to afford interest and debt payments of $3.2 million to $6.3 million each year to cover the costs of a new arena.
Currently, all that’s been taken into account is public money and a small amount from the actual operations of the arena. Where is the private investment?
Joe Robie Stadium, home to the Miami Dolphins, was built with $12 million of Joe Robie’s own money and $90 million in loans from three private banks. The Fleet Center, home to the Boston Celtics, was privately financed except for road improvements, a mass transit station and service costs. The St. Louis Blues built their facility with a $30 million investment from the owners and a bank loan for the rest of the facility costs. The city provided the land and paid $10 million for land clearance.
How much is the Storm willing to invest in their future home? And how much are local banks willing to loan for such a facility? David Swindell, in an article for the Buckeye Institute said, “private financial markets will provide funding for the most economically profitable projects. If significant private financing is not available, taxpayers and policymakers, should take that as a sign that the sports facility is not a good investment.” In fact, the only reason more sports franchise owners decline to construct their own stadium is because taxpayers so often relieve them of the need to do so.