A tax to finance arena is looming

In the battle between the city of Youngstown and Global Entertainment Corp. over the management of the Chevrolet Centre, the Arizona-based company has won.

Not only is Global washing its hands off what has been a losing business proposition, but it no longer will have to pay $600,000 a year to the city.

It seemed too good to be true when International Coliseums Co., the Global subsidiary that has operated the arena since it opened two years ago, agreed to the $600,000 payment. There were no conditions placed on the deal. It didn’t matter if the arena turned a profit; the city would get its check.

But it quickly became apparent that the company was having second thoughts about the deal. ICC did not meet its first payment deadline in September, and when Mayor Jay Williams made a public demand for the money, ICC/Global filed a lawsuit claiming breach of contract.

Well, after weeks of point and counterpoint, the city and ICC have arrived at a separation agreement.

The lawsuit has been dropped, the $600,000 payment that was due last month will be paid. The city has hired a temporary manager, with support services from the finance and law departments, for when ICC leaves at month’s end. It also will advertise for a more permanent arrangement.

Reality check

But here’s a reality the mayor, members of city council who have had blinders on when it comes to the arena, and supporters of the facility must face: It doesn’t matter whether the top entertainment management company in the world offers to operate the Chevrolet Centre. It will not agree to a $600,000 a year payment to the city.

As has been pointed out in this space dozens of times over the years, it is no accident that sports arenas, convocation centers and other such facilities are built by the government — read that taxpayers — and not private developers.

They are not profitable endeavors.

Even with the $26.8 million federal grant former Congressman James A. Traficant Jr. secured for Youngstown, there was no private money brought to the table. This, despite then Mayor George M. McKelvey’s highly publicized invitation to developers to “bring your checkbooks to the table” to have access to the federal money.

But then McKelvey changed his tune. He claimed the city was on the verge of losing the grant if it did not proceed with the so-called convocation project, but U.S. Sen. George V. Voinovich was prepared to secure an extension of the deadline set by the U.S. Department of Housing and Urban Development for the city to show progress.

Thus, the $45 million arena was built with taxpayer money — including $12 million borrowed by the city.

The $600,000 Global/ICC had agreed to shell out annually was designed to go toward the $750,000 yearly interest payment on the loan.

Now, City Hall will have to come up with the entire amount.

Given that most city residents are on fixed incomes and, therefore, don’t pay income taxes — of those residents who do pay the tax, many are on the public payroll — Mayor Williams and council must find another way of generating revenue to pay off the loan. A tax increase in the city is a nonstarter.

Countywide tax

Therefore, a countywide tax is the only realistic option. Williams could make a strong case for such a levy, given that suburbanites were the most vocal advocates of a sports/entertainment facility.

When it was suggested that the $26.8 million federal grant could be better used for the revitalization of the city and to finance projects that would create real jobs, proponents of the arena were incensed. They countered that such a facility would be the spark that ignited the revival of the central business district. They were wrong.

And so today, ICC/Global, an international entertainment company, has bailed out, and a $12 million loan promises to shackle the public treasury for years to come.

But what if the idea of a tax fails to get any traction?

Then, every city government employee, from the mayor — and his predecessor, McKelvey — on down, should give up a portion of his or her salary, or retirement income, to help pay the $750,000 annual obligation.

Sarcasm aside, the reality is that the best the city of Youngstown can hope for is a company agreeing to take over management of the arena without expecting any help from city hall, but also not paying government a dime.