Bengals, Reds and Hamilton County negotiate stadium fund deal
By Sharon Coolidge • scoolidge@enquirer.com • December 1, 2010
Hamilton County commissioners Wednesday committed to a plan that for the next two years solves a deficit in the fund that pays for the county’s two professional sports stadiums that means homeowners will pay more money in property taxes – and for the first time, the Reds and Bengals will pitch in.
The average Hamilton County homeowner will pay $80 more in property taxes than last year – meaning instead of saving about $114 a year, homeowners will save about $28. That’s on a $200,000 house.
For every $100,000 value of a person’s home, he or she will now pay $42.94.
That payout – which was promised to voters in 1996 when they approved a half-cent sales tax to build the stadiums – comes out of the ailing stadium fund. Reducing the property tax rollback will preserve $13 million in the fund that has deficit of $16 million in 2011, grows to $32 million for each of the following three years and could eventually reach $700 million if nothing is done.
By not erasing the entire property tax rollback, commissioners can revisit their decision every year and, they say, increase the rollback later.
Commissioner Greg Hartmann – who will be the board’s president next year and in the majority – committed the board to cutting all county levies next year, which would reduce property taxes.
The teams agreed to pay $9.6 million in rent over the next five years – as opposed to nothing, which the original lease calls for in 2011 to 2015.
The Bengals will pay $7.4 million; the Reds, $2.2 million.
The teams walked away from the bargaining table – where after year of slow discussions, negotiations went late into the night Tuesday and most of the day Wednesday – as winners, too.
For the Bengals:
• The plan includes a $1 million credit against those lease payments for a new playing field and pays for a new scoreboard system, which can cost $10 million. The original lease calls for the county to make all capital improvements to the stadiums, but recently the stadium fund woes have meant the teams have had to pay for some of those themselves.
• The team now has exclusive naming rights to Paul Brown Stadium. That’s potentially lucrative for the team if they can find a sponsor and means little for the county, which under the original lease would see little – if any – profit from naming rights.
• The team is guaranteeing the county $150,000 in revenue a year from other events, like concerts and monster truck rallies. That’s about what it has made each of the last 10 years. But after that, for the rest of the lease, all revenue over that amount goes to the team. Previously the team and the county shared those profits equally.
For the Reds:
• The county currently makes 25 cents on every ticket sold. Beginning in 2016 the team gets to keep that surcharge on all ticket over 1.75 million sold. The team currently sells about 1.9 million tickets a season. So that’s a deal worth about $37,500 a year.
Additional surcharges on Reds and Bengals tickets, long talked about as part of the plan, are not included.
Under the terms of the original leases, the teams didn’t have to help fix the stadium fund.
This plan solves the deficit for two years – making up the $16 million next year and the $32 million needed in 2012 – and by doing so, lessens the long-term deficit projection, County Administrator Pat Thompson said.
In that time, the county will begin seeing revenue from the state’s downtown casinos and county officials plan to pursue $7 million owed to the stadium fund by the state and seek tax forgiveness on the land the stadiums sit.
In the end, Hartmann, a Republican, and Democratic Commissioner David Pepper teamed up to pass the plan.
Hartmann said there were no good choices: “This action avoids putting the county in fiscal emergency.”
Pepper – echoing what he’s said for a year – said it would have been irresponsible to leave in place the full property tax rollback.
“You can’t spend money you don’t have,” he said.
Democratic Commissioner Todd Portune – who pledged last year that the board would solve the problem together – balked at passing a plan that gave up naming rights and didn’t get enough concessions from the Bengals.
He had said Monday all three commissioners were committed to reducing the property tax rollback. But when it came down to the 3 p.m. vote – just hours before the deadline in which the auditor’s office needed a decision so it could set the 2011 property tax rate – Portune said the Bengals didn’t do enough.
“What is before us is not parity or equity in terms of shared sacrifice and I cannot agree with it,” Portune said. “Despite our best efforts the contributions from the teams are not fair enough to ask us to invade the property tax rollback.”
Portune again pitched a plan for a one-year half-cent sales tax. His fellow commissioners didn’t bite, saying residents don’t want additional sales tax.
Both teams issued statements, saying they were committed to helping.
“Our commitment is a continuation of our longstanding history of cooperation with the county and is consistent with the financial concessions the team has made since the inception of the Great American Ball Park project,” said Libby Korosec, spokeswoman for Reds owner Bob Castellini.
Bengals spokesman Inky Moore said the team was glad to help out in a manner that didn’t impose a ticket tax.
“The Bengals hope that today’s steps will serve the public interest by helping to stabilize the county’s financial picture,” Moore said. “The Bengals further hope that it serves as the basis for a more positive relationship between the two parties going forward.”
Mark Quarry, director of governmental affairs for the Cincinnati Area Board of Realtors, criticized commissioners for chopping the property tax credit.
“It was part of a promise, part of the vote to build the stadiums,” Quarry said. “That promise is no less in value than the leases with the teams.”
He said by forcing residents to pay more in property taxes during this tough economy their decision would drive residents away and keep people from moving to the county.
“When the Bengals were being courted they said they were looking at moving, that they needed new stadiums to stay competitive,” Quarry said. “What must Hamilton County residents think now that the property tax rollback has been impacted? Perhaps they’re concluding, ‘It’s time to move out of Hamilton County.’”
Quarry didn’t offer a solution.
More on the stadium talks
Earlier this week, commissioners had said they were willing to erase part of the rollback. Commissioners had to vote on the rollback Wednesday to give the county auditor time to set the 2011 property tax.
Quote:Naming rights
The Bengals’ original lease would have made it tough for the county to profit from naming rights.
At the start of the lease the team paid Hamilton County $5 million for naming rights.
In exchange, the lease calls for the team to pay for signs and it would get the first $16.6 million of any naming deal, an amount that increased by 6 percent annually beginning in 2000.
In current dollars, that’s $29.7 million.
The Bengals would have received 70 percent of what’s left over, plus inflation, according to the lease. The county would have received the rest.
So how much are naming rights worth?
In July, local Florida bank EverBank bought the naming rights to the Jacksonville Jaguars’ stadium for $16.6 million over five years.
In a change in the team’s lease, the Jaguars no longer have to share that money with the city.
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Deal reached with teams; property tax increase voted on for budget shortfall
