For-profit? Surely the state kids

For-profit? Surely the state kids

If the punchline of this joke didn’t have the potential to cost the city of Youngstown millions of dollars it doesn’t have, we would laugh aloud at the contention by the Ohio Department of Taxation that the city’s downtown arena is a for-profit enterprise.

Can’t anyone at the Department of Taxation read a balance sheet? Any “profits” of the Chevrolet Centre, now known as the Covelli Centre, are an illusion. Even when the arena shows a quarterly operating profit, it’s not enough to cover the debt service the city faces on nearly $12 million it had to borrow to build the $45 million facility.

Yes, the city has contracted with a private corporation to run the facility, which is a good thing because most cities don’t have the expertise to run stadiums, ball parks and arenas. And cities (with one notable exception) don’t own the athletic teams that profit from the facilities that cities provide.

Loss-leaders

These facilities are loss-leaders for municipalities. The cities hope that the quality of life is improved by having these facilities and that suburbanites and tourists are attracted by the facilities and spend money nearby. They are a lot of things, but the one thing they are not is for-profit enterprises. And the Covelli Centre is no different from any other stadium, arena, ball park or concert hall in that regard.

The city is going to appeal this wrong-headed finding by the tax commissioner. We can only hope that sounder logic prevails, because if Youngstown is struggling to cover its $11.9 million mortgage on the center, it certainly can’t afford the $4.5 million tax bill.

If they haven’t started drafting legislation already, Youngstown’s delegation to the General Assembly should start working on it now.