Revenue to cover shortfall

Youngstown's mayor says the financial expectation for the center wasn't realistic.
By DAVID SKOLNICK
CITY HALL REPORTER
YOUNGSTOWN -- Facing the likelihood that the Chevrolet Centre's profit will be less than anticipated, Mayor Jay Williams said city revenue would be used to make up any shortfall.
"I'm not going out on a limb by saying" the center's profit will be less than the city's debt service on the building, Williams said. "The direction we're heading, that isn't an unreasonable expectation."
Through its first five months, the center's profit is $245,872. Global Entertainment Corp., the company managing the center, had projected profit through February of $553,203, more than double the actual amount.
Global's projection, released in January, states the center would make $645,221 in profit between October 2005, the month it opened, and this September. Global also projects two one-time revenue sources to add $300,000 to the facility's bottom line.
The city wants enough money to pay the $767,000 annual debt service it has from borrowing $12 million to help fund the center's construction.
If the center's profit is less than the debt service, the city would use money from its nontax revenues fund, Williams said.
The fund generates about $6 million to $7 million annually on items such as court fees, parking and parking lot revenues, license plate fees, park and recreation fees, and rent on city-owned buildings.
"To the general public, it's city revenue," Williams said.
Unrealistic expectations
Williams, mayor since Jan. 1, said that "from the very beginning" the financial expectation of the center wasn't realistic.
Global estimated in August 2005 that the center would make $1,153,802 in profit in 2006. City officials at the time noted that the projection was a low, conservative estimate and the actual number would be more.
In January, Global significantly revised the profit to $645,221, a figure that won't even meet the city's debt service on the building.
"We started with an aggressive expectation that was too great," Williams said. "It can't continue to operate like this. We have to meet that debt. We can do this a year or two, but we need to know where we're going financially."
Global officials are expected to attend the April 19 city council meeting to give an assessment of the center.
Collection failure
Adding to the center's financial problems is the failure to collect a $1.50 parking fee on tickets to most center events. That led to the loss of about $144,000 in revenue, said Kyle L. Miasek, the city's deputy finance director who discovered the problem.
Also, the city is finalizing negotiations with General Motors over the naming rights of the facility. GM has paid $25,000 for the naming rights and will pay $150,000 once the contract is settled. GM agreed to pay $175,000 in cash annually in a proposed three-year contract with 17 annual options.
skolnick@vindy.com