Cincinnati FC is getting $ 17 million from the city’s hotel tax for West End stadium infrastructure, but it may cost taxpayers a lot more.
The result: additional interest of $ 28 million, and in the worst case $ 7.5 million of that, could be diverted from the city’s capital fund. Money that could have been used to improve the aging and undersized Duke Energy Convention Center is now flowing into the stadium plan.
The city pledged $ 33.9 million to prepare the grounds, supply and park the 21,000-seat Cincinnati FC stadium. The city has about half the money on hand or will take it out of the capital budget.
But the other half of the $ 33.9 million is different. It will come from the city’s hotel tax portion and borrowed against future proceeds.
The loan amount – the money Cincinnati FC will see – is $ 17 million, but payments on this loan could go up to $ 1.5 million per year for 30 years. That’s a total of $ 45 million.
If it were a home loan, the interest rate would be around 8 percent. But in this case, after 30 years, the city will own neither the stadium nor a house.
The Greater Cincinnati Redevelopment Authority will collect these payments and payments or the infrastructure bonds.
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The funding agreement is nothing new. The city and agency often issue bonds and use a long-term source of income for upfront costs.
The portion of hotel tax now allocated to the bonds has averaged $ 1.1 million a year over the past few years, according to the city council. On Wednesday, the city council passed Measure 5-4, which may provide more city money to cover possible deficits.
The passing of the “Eighth Addendum to the Cooperation Agreement for the Cincinnati Convention Center Expansion and Renovation Project,” allows the city to pay up to $ 250,000 each year when hotel tax revenues are tight.
Mayor John Cranley’s office said the $ 250,000 is currently earmarked for the Sharonville Convention Center, but the city has asked for the money back. The Hamilton County’s Convention Facilities Authority will vote on May 29 on whether Cincinnati should receive the money.
City officials said if the agency didn’t release the money, no additional money would go into the stadium plan.
Proponents of the stadium plan pointed out that most of hotel tax revenue comes from visiting out-of-towers, rather than from the pockets of residents of Cincinnati and Hamilton Counties. However, when you take money out of the capital fund to cover any deficits, the local taxpayers, not the visitors, pay.
The 6.5 percent tax is levied on hotel and motel rooms across Hamilton County, but another 2.5 percent is levied by the city on rooms in Cincinnati.
While a portion of the hotel tax will continue to be used to pay off convention center debts, additional money for the Duke Energy Convention Center will not be made until the $ 1.5 million is paid.
The downtown convention center has not been extensively expanded for more than 30 years and has not been renovated since 2006.
The stadium contract and tax payment all depend on Major League Soccer granting FC Cincinnati an expansion franchise.
Attorney Tim Mara, an outspoken opponent of the use of public funds in stadiums, described the deal as a missed opportunity for the Duke Energy Convention Center and other tax recipients.
“This money has not been available for 30 years,” said Mara.
Councilor David Mann said stadium infrastructure, like buying a house, is an investment.
“It will pay off in terms of all of the things that make our city more alive,” said Mann.
He and other stadium supporters said it would encourage more development and create more jobs. The deal resulted in payments of approximately $ 25 million in lieu of taxes to Cincinnati Public Schools that the district would not have seen had the property not been developed. Mann said the stadium will also increase the city’s income tax base.
The financing plan for the stadium infrastructure
This is where the 33.9 million come from:
- District for Tax Increase Financing (TIF) in the city center / over the Rhine: USD 8 million
- Money from the sale of Blue Ash Airport: $ 6.38 million
- City Capital Fund: $ 2.5 million
- City share of hotel tax: $ 17 million