Bengals rebuttal

FACT CHECK ON MR. PORTUNE’S JUNE 4, 2012 DRAFT RESOLUTION On June 4, 2012, Mr. Portune offered a resolution for the County Commissioners to consider that would provide deferral of contractual obligations to the Cincinnati Reds and the Cincinnati Bengals. This follows in a long history of unilateral plans Mr. Portune has developed and offered publicly to address the stadium tax issues. In each case, the plans have been developed without input from the County administration. Over the same 3-year period in which Mr. Portune has offered these plans, he has never supported any of the long-range plans that the County administration has developed.

RESOLUTION NO.: 2011-__ STADIUM FUND LONG TERM FRAMEWORK RESOLUTION, enacted on this day ____of June, 2012, for the purpose of establishing the policy framework within which the Hamilton County Board of County Commissioners shall guarantee Stadium Fund solvency, and within which, said Board shall make all decisions about fund management.

WHERAS Hamilton County faces a deficit in the dedicated sales tax fund more commonly referred to as the Stadium Fund by year's end 2012 and for each year thereafter through the retirement of stadium related bonds due to the combination of: 1.

the cost of existing debt service on bonds issued for the construction of Paul Brown Stadium And the Great American Ballpark;

2.

Payments In Lieu Of Taxes [PILOT] to Cincinnati Public Schools;

3.

property tax subsidies in favor of a certain class of residential county property tax payers [the "Property Tax Rollback" or "PTR"];

4.

current 2011 operational expenses paid by Hamilton County as required under separate leases with the Cincinnati Reds and the Cincinnati Bengals for 2012 and each year thereafter until otherwise modified by mutual assent, or until expiration of the respective lease agreements with each team; and

5.

lack of growth in the dedicated 0.5% sales tax fund for stadiums, schools and property tax relief; and

6.

All annual capital improvements, maintenance and/or agreed-upon new capital repairs, enhancements or improvements per the respective lease agreements or as otherwise agreed upon; Facts: The stadium fund has and continues to pay for much more than this list. The bonds that were issued paid for many costs beyond those of Paul Brown Stadium and Great American Ballpark including acquisition of all of the land that was required for the Banks development and

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infrastructure improvements for future development of that land. In addition, tens of millions of dollars have gone into City projects like Ft. Washington Way. The Hamilton County Auditor has consistently described decisions to expend stadium sales tax receipts for such purposes as “mission creep.”

The combined effect of which are all producing annual expenditures in excess of the amount of sales tax revenues being generated by the dedicated 0.5% sales tax approved by voters in March 1996; and WHEREAS, at the time of the public vote in March 1996 on the dedicated 0.5% sales tax voters were promised that: 1.

the tax would cover the costs of the land and construction for two stadiums and the garages, lots and related infrastructure to support the stadiums at an estimated cost of $540 Million; and Facts: The $540 million was an estimate to build 2 stadiums on land the County would already own and not have to buy. In fact, with the help of then City Council member Todd Portune, the City insisted that the County move the stadium site onto City-owned property, then held the land hostage until the County agreed not only to pay a handsome price for the land but also to contribute tens of millions of dollars from the stadium sales tax to various City projects.

2.

the taxes collected would pay for any property taxes on stadium property; and

3.

that the taxes collected would provide $5 million per year to support the Cincinnati Public Schools 20 year building program; and that

4.

a class of residential property owners would receive property lax relief equal to 30% of the sales taxes collected each year; and

5.

the sales tax was intended to run for a period of 20 years or less; and last that Facts: There was never a 20-year period for the sales tax. The County was to end the tax when the last of the bonds issued for the project was paid off. The first bonds issued in 1998 had a 30-year term.

6.

the sales tax would cover all obligations and would do so based upon expected growth in an amount equal to not less than 3% per annum.

Facts: Assumed sales tax growth on the project was 2%, not 3%. The 2% assumption held true throughout the Bengals’ lease negotiation and extension as well as Paul Brown Stadium design and construction. The assumption did not change to 3% until 2000.

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WHEREAS, the impact of several worldwide events [the terror attacks of September 11, 2001 and the current ongoing global recession] that could not have been foreseen at the time of the sales tax vote have conspired to undermine the forecasted growth in the sales tax fund; and WHEREAS, the impact of the global recession upon the local economy continues to produce stark revenue forecasts for local and state governments such that Hamilton County must still meet all state and federal obligations and mandates plus provide a full menu of local services to meet the demands and needs of a community in the throes of increased unemployment; higher rates of joblessness and foreclosures; all producing greater need in a time of approximately 25% fewer local revenues from all sources; and WHEREAS, in addition to the aforementioned unanticipated events, other factors have worked to undermine the funding model that was understood by voters and that voters relied upon in March 1996 that have thrown the model out of balance, including: 1.

cost overruns at Paul Brown Stadium that increased the cost of that one stadium to $454 Million when voters were told in 1996 that two stadiums, garages and infrastructure would cost $540 Million; and Facts: The County would not have been required to borrow nearly as much for those two ballparks if it had not incurred substantial other costs, most of which were driven by the City of Cincinnati during the 1997 time period when Mr. Portune served as chair of Cincinnati City Council’s Select Committee on Special Projects, overseeing Riverfront Development, and as a City representative on the City-County Steering Committee for riverfront development. Thus, for example, in February, 1997, the City insisted that the stadium site be moved from land already owned by the County onto land owned privately and by the City. There was benefit to the City to that move, but it came at a cost of $100 million – paid for by County sales tax bonds and consistently (mis)identified as a cost of Paul Brown Stadium – included in the $454 million figure.

Having required that the stadium site be moved onto City-owned land, the City then held its land hostage, refusing to turn it over to the County for almost a year. Mr. Portune’s laid out that strategy in April of 1997 – nine months before the City turned over the land. As the Enquirer reported: Ultimately, the City could refuse to deed over land it owns that the County needs to make the football stadium project work, said City Councilman Todd Portune. “One clear option is, ‘you either work with us, or you don’t get the land,’” Mr. Portune said.

The City demanded, and ultimately received after months of delay, millions of dollars of County sales tax proceeds for its Fort Washington Way project ($21 million) and construction of city streets and infrastructure ($44 million as of 2005; higher today). Moreover, the 11+ month delay severely compressed the schedule for geotechnical design

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and construction of Paul Brown Stadium, fed directly into the rushed design that was the primary source of the $45 million in cost overruns for Paul Brown Stadium, and threatened the schedule for Great American Ballpark as well. $200 million, the price-tag associated with the City’s actions, is more than a quarter of the dollars that the County had to borrow for the two stadiums. Reducing the current $27 million debt service by 25% would make a huge impact on the stadium fund.

2.

the PILOT payments to schools are in excess of $10 Million – over double what was promised to the schools in 1996 [$5 million]; and

3.

the sales tax has barely grown a cumulative 1% total in the last 11 years as opposed to the projected 3% per annum; and Facts: At the time of the execution of the Paul Brown Stadium lease, the County’s expert financial advisor1 was assuming that the sales tax growth rate would be 2% and believed – correctly – that all of its obligations could fit within a 2% growth rate of the stadium. In fact, the stadium sales tax has grown consistently at a 2% rate:

It was not until the 2000 bond issues (after it was clear that the City's price for selling the County the land it needed to build the stadium in the more-westerly location the City had demanded was going to add another 1

Public Financial Management of Philadelphia, a firm that has been working for the County for many years – and whose continued retention Commissioner Portune has repeatedly voted to approve.

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$150 – 200 million to the project) that the County’s financial consultants moved from a 2% growth assumption to 3%.

WHEREAS, the Board has opted to do a variety of acts to maintain fund balance over the years - some successful and others not, that include: •

various refinancings of the 1996 and later years sales tax bonds;

•

successful negotiations with the Reds on the subject of capital cost payments of various stadium improvements; Facts: The County has negotiated with both the Reds and the Bengals on capital cost payments of various stadium improvements.

•

the installation of field turf at PBS to enhance its marketability for other revenue generating events; Facts: The Bengals brought the field turf product to the County and worked to get it installed.

•

the scheduling of revenue producing events such as the OHSAA football playoffs; college football games; concerts and other events; Facts: The Bengals have worked closely with Hamilton County, the Macy’s Music Festival, the University of Cincinnati and others to make sure these events have taken place.

•

completion of the Banks parking facilities that will, once paid off in five years or less, provide a dedicated and reliable source of revenue for the county; and

•

the willingness of the Board to consider new revenue measures, including the adoption of a cigarette tax proposal that was ultimately denied by the state legislature;

•

negotiations with the teams, including the deal struck in December 2010 that neither team ultimately signed; and Facts: Mr. Portune has voted against and spoken out against every proposal the County administration has made involving deals with the teams. In 2010, the County walked away from agreements, not the teams.

•

litigation with the Cincinnati Bengals; and Facts: Mr. Portune was the driving force behind two lawsuits filed against the Bengals, both of which were thrown out of court.

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WHEREAS, the Board continues to engage the Cincinnati Reds and Cincinnati Bengals about these issues and in doing so must convey a reasonable posture that protects county taxpayers from additional expense and obligation while maintaining both stadiums as major league facilities suitable for the exhibition of Major League football and baseball; and WHEREAS, the current economic climate demands that Hamilton County adopt a framework for Stadium Fund solvency that is contained within the existing dedicated 0.5% sales tax and that does not add any additional tax burden to county taxpayers; and WHEREAS, while the county anticipates receiving new tax revenues from the opening of casinos around the state of Ohio beginning in May 2012 and of the "Horseshoe" Casino in Cincinnati, Hamilton County, Ohio commencing in 2013. said casino tax revenues should be reserved in part for the purpose of supporting positive new economic development initiatives and completing existing positive growth economic development initiatives WHEREAS, the Board must act no later than midnight November 30, 2011; 2011?

NOW THEREFORE BE IT RESOLVED, by the Board of County Commissioners of Hamilton County, Ohio, that the following Principles of Stewardship shall govern the Stadium Fund; shall govern Hamilton County's management of said fund; shall govern the county's short and long range planning with respect to the oversight of said fund; and shall govern the county's relationship and negotiating/managing posture with the Cincinnati Reds and Cincinnati Bengals concerning the use of Paul Brown Stadium and the Great American Ballpark: •

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Hamilton County shall operate, maintain and manage the Great American Ballpark, Paul Brown Stadium and all support operations for the benefit thereof in a fiscally sound and responsible manner, within existing budgeted resources and sources of funds for said purposes as approved by the voters of Hamilton County in March 1996 and for such purposes as were presented to the voters in anticipation of the vote of March 1996 and in such a manner that the total annual revenues realized by the county shall always be at least equal to the cumulative total of all expenses and financial obligations related to the same. Consistent with this policy the dedicated 0.5% stadium sales tax shall be reserved to be used as first promised to voters to pay for: 1.

Debt service on the capital costs of stadium construction; and

2.

30% of sales taxes collected each year for property tax relief; and

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3.

Taxes on riverfront property used for stadium purposes; and

4.

PILOT payments to Cincinnati Public Schools

Facts: The County has contractual obligations to the teams that are no less binding than any of these four.

•

Hamilton County shall exercise Best Efforts at maximizing new revenues from other events in favor of Hamilton County arising out of the operation of the Stadiums and shall insist upon reciprocal Best Efforts from the Cincinnati Bengals and Cincinnati Reds to work in such a fashion as to generate net new revenues in favor of Hamilton County which shall be reserved for use by and dedicated to be deposited in the Stadium Fund.

[Target Goal: $1 Million/year net new revenues]. This paragraph contemplates new revenues generated from events staged at PBS or GABP and shall include Hamilton County contracting with an agreed-upon third party professional marketer of large venue staged events at or around the same date as the adoption of this Resolution; and Facts: Mr. Portune has been talking about an extra $1 million a year in net new revenues from the stadiums for years. Those in the County administration who have looked at this have concluded it is fantasy.

•

Hamilton County shall commit to paying operational expenses at both GABP and PBS in equitable amounts, on a parity level equal to the amounts paid annually for the benefit of the Cincinnati Reds; with any amounts in excess of said amount being first requested of the teams to agree to absorb and pay, or absent the same, to be booked as accrued liabilities to be paid at such future time as there are available funds in the stadium fund after first paying all other liabilities as described above; and Facts: Read literally, Mr. Portune proposes to breach one or both leases.

•

The Stadium Fund model shall be based upon a projected annual growth rate in the dedicated 0.5% sales tax of 1.0% per annum; and

•

The Board shall enact such further Resolutions as are necessary to effect the purposes and principles espoused in this Resolution, including:

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1.

A Resolution that commits to pay all debts including accrued liabilities until paid in full; and

2.

A Resolution that commits to maintain the dedicated sales tax for only such time as is necessary to payoff all obligations set forth in this Resolution and to then repeal the tax when all such obligations have been paid in full; and 7

3.

A Resolution authorizing the County Administrator to enter into a contract with an agreed-upon third party professional marketer of large venue staged events at or around the same date as the adoption of this Resolution; and

4.

A Resolution that shall direct that all county obligated, or agreed, capital improvements at either the Great American Ballpark or at Paul Brown Stadium shall be funded via the issuance of bonds against future revenues, including future sales tax collections, and become payable at such time as there are sufficient resources available to begin making payments to retire said bonds; and

5.

A Resolution detailing that in any year that the stadium sales tax fund lacks sufficient available balances to pay for operational expenses at either GABP, or PBS, or both, after first paying the required obligations of debts service on construction capital, PILOT payments to CPS, full property tax rollback, and real estate taxes on stadium property, that such expense shall be recorded as accrued balances due either the Reds or the Bengals, as the case may be, and shall be paid at the first time there are available balances sufficient to begin retiring said accrued debt.

Facts: The leases with the teams do not permit the County unilaterally to decide to delay or defer its obligations under the leases.

BE IT FURTHER RESOLVED, that the Clerk of the Board be and is hereby authorized and directed to certify copies of this Resolution to Christian Sigman, Administrator; Dusty Rhodes, County Auditor; Joseph W. Testa, Tax Commissioner, State of Ohio; to Troy Blackburn of the Cincinnati Bengals; to Bob Castellini CEO of the Cincinnati Reds; to Mary Ronan, Superintendent of Cincinnati Public Schools.

ADOPTED at a Regular Session of the Hamilton County Board of County Commissioners on this ____ day of June, 2012.

____ .Aye ____ Nay Mr. Hartmann

____Aye ____ Nay Mr. Monzel

____Aye ____ Nay Mr. Portune

CERTIFICATE OF CLERK

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IT IS HEREBY CERTIFIED that the foregoing is a true and correct transcript of a resolution adopted by the Board of County Commissioners, Hamilton County, Ohio, in session this ____ day of June, 2012.

IN WITNESS WHEREOF, I have hereunto set my hand and affixed the official seal of the Office of County Commissioners, Hamilton County, Ohio, this ____day of June, 2012.

_______________________________ Jacqueline Panioto, Clerk Hamilton County Commissioners Hamilton County, Ohio

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