Lawmakers flex muscles with regard to the arena

Global Entertainment Corp., which is operating and managing the Chevrolet Centre (formerly the Youngstown Convocation Center) for Youngstown city government, found out last week that the honeymoon with members of council is over. No longer will the Phoenix-based company get away with keeping lawmakers in the dark with regard to details about the facility's operation.
Indeed, Global officials now have a standing appointment with council every second Wednesday of the month and, in between, will have respond to inquiries from a three-member legislative committee formed last week.
And, the company will also have the city's deputy finance director casting a shadow over it.
A week ago, we posed the following question in this space: "Who's minding the $45M store owned by the city?" It was prompted by the fact that Global Entertainment had not submitted financial reports pertaining to the arena for four months. No one in City Hall could explain why a company under contract with government could tell officials that personnel changes had delayed such reporting.
As we said last week, "What happened to the almost daily meetings between city and company officials that former Mayor George M. McKelvey suggested would be taking place to ensure the investment of $45 million in public funds is protected?"
Youngstown's new mayor, Jay Williams, and members of council obviously share our concerns because they're adopting measures designed to keep Global Entertainment on a short leash.
That's the way it should be -- considering that the company has no financial stake in the arena. All the money used in the construction came from the public treasury and even the expenses associated with the operation and management of the facility are paid for from the revenues generated.
Important admission
Indeed, during a special appearance before council last Wednesday, Roger Swanson, interim executive director of the center, acknowledged that the $1.15 million profit projection for the 2006 fiscal year made by former Executive Director Jeff Kossow would not be achieved. For the period October 2005 to September 2006, Global is now projecting a profit of $645,221. When all the financial obligations related to the arena are met, the surplus will be less than $200,000 for the fiscal year.
Councilman Rufus Hudson, D-2nd, was on the right track when he asked Swanson why Global Entertainment was revising its profit projection rather that doing whatever it takes to meet the $1.15 million target. Hudson's line of inquiry opens the door for Mayor Williams and members of city council to seek an answer to the following crucial question: Does the contract between the city and Global Entertainment impose any penalties on the company if it fails to deliver on its promises?
The question goes to the very heart of the arena project. The city has hired an internationally renowned company to make sure the facility operates in the black and that it does not become a drain on the general fund, yet there is nothing to suggest that Global Entertainment is under any financial pressure to produce.
Does the contract require Global Entertainment to cover revenue shortfalls? If not, where will the money come from?
Finally, does the contract call for a replacement reserve fund and a vacancy contingency reserve fund that bankers require developers to maintain as conditions of securing financing?
The door is now open for the mayor and council to seek answers to those and other questions about the operation and maintenance of the arena.