Youngstown, Austintown get good news from state on Covelli Centre, racino

Ever since the Republican take- over of state government in January 2011, Democrats in the General Assembly have been marginalized and largely ignored on major issues.

For predominantly Democratic counties like Mahoning and Trumbull, it has meant getting used to no longer being the beneficiary of state largess, as when a Democrat occupied the governor’s office and Democrats were in the majority in the House.

It was, therefore, no small feat for the area’s legislative delegation to include two major provisions in bills being considered in the last couple of weeks.

Given that the provisions will have significant financial ramifications for the city of Youngstown and Austintown Township, residents should acknowledge the work of the legislators, led by state Sen. Joe Schiavone of Boardman, D-33rd, the minority leader, and Rep. Ronald V. Gerberry of Austintown, D-59th. Of course, the GOP leadership and Republican Gov. John Kasich are also deserving of the region’s thanks because they could easily have rejected the provisions that affect the financial well-being of Youngstown and Austintown.

For the city, it means not having to pay a $4.75 million tax bill from the Ohio Department of Taxation for the Covelli Centre. For the township, the provision opens the door to a $2 million-plus windfall from state gambling revenue that would be used for police, firefighters and other services when the proposed “racino” is built by Penn National Gaming on a 186-acre site at the undeveloped Center Pointe Business Park along Route 46.

Penn National, which last week opened a Vegas-style casino in Toledo and is building another casino in Columbus, bought the Austintown property for $4.6 million and intends to spend more than $200 million on a thoroughbred horse racing track and facility to house state-licensed electronic slot machines.

Court ruling

On Wednesday, a judge dismissed a lawsuit challenging the legality of having slot machines at racetracks, which means the project in Austintown can now move forward.

In arguing for the dedicated revenue stream, Rep. Gerberry noted that while the racino will be a financial boon not only for the township but for the area, it will also put a strain on police, fire and other services provided by local government. The increased traffic will also mean abnormal wear and tear of the roads. Half of the initial outlay will have to be used for infrastructure or capital costs.

Austintown, and other communities with racinos, would receive $1 million to be paid in December and June and $500,000 annually thereafter.

But it is all conditioned on Penn National Gaming relocating its Beulah Park horse-racing facility in Columbus to Austintown.

Youngstown, on the other hand, will get immediate financial relief when the bill that includes the tax-forgiveness provision is signed into law by the governor.

The $4.75 million demand from the state represents delinquent taxes and penalties, and if the city of Youngstown had been forced to pay the bill, it could have triggered a fiscal collapse of government.

As Mayor Charles Sammarone put it, “I don’t know where we’d find $4.75 million.” The provision that was adopted not only lets Youngstown off the hook, but also makes the Covelli Centre tax-exempt for as long as city government owns it.

The legislature not only did Youngstown a huge favor, but also spared the department of taxation the embarrassment of having to explain in court how it determined that the sports and entertainment facility is “for profit” and, therefore, must pay taxes.

Huge debt

In the seven years the complex (originally named the Chevrolet Centre) has been in operation, there has been little to celebrate in terms of it being a money-maker. The fact of the matter is that the city of Youngstown borrowed $12 million to help defray the $45 million construction costs and only now has begun to repay the principal and interest. The money comes out of the general fund because the Covelli Centre does not generate enough revenue to meet all the operating and maintenance expenses.

State tax officials may have been blinded by the fact that a private entity has operated the sports and entertainment facility, but the city has never received enough money to pay the $1 million annual tab for the loan.

Indeed, the mayor has asked the city’s consultant to explore all options regarding the Covelli’s ownership and operation. He has said that a sale is something he could consider if the price were right — if a potential buyer offered to pay off the city’s debt, for example.

Sammarone is facing reality as it applies to Youngstown’s finances.

The city isn’t growing in population, its tax base is anemic and there are major challenges on the horizon.

The Covelli Centre is a luxury that will be increasingly hard for Youngstown to afford.