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Economy and Business


Next step for the sin tax? Figuring out how to spend the money
The Browns, Cavs and Indians have a longer wish list than the 20-year tax can likely cover
by WKSU's KEVIN NIEDERMIER


Reporter
Kevin Niedermier
 
Progressive Field, Quicken Loans Arena and FirstEnergy Stadium all have requests in for the sin-tax money.
Courtesy of M.L. SCHULTZE
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In The Region:

Now that Cuyahoga County voters have approved extending the sin tax for up-grades on Cleveland’s pro-sports facilities, local officials have some decisions to make. They must agree on how the revenues are spent on the city and county owned venues. And they may be asked to someday renegotiate the nearly quarter century old contracts with team owners.

LISTEN: The sin tax's next step

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After Issue 7 passed Tuesday night, Cleveland City Council President Kevin Kelley called it a victory for Cleveland’s momentum. He says the Browns, Indians and Cavaliers are important economic engines that the city needs to keep. And Kelley sees no reason to renegotiate the city and county’s agreements with team owners to make them more public- friendly, as some people have suggested. Kelley says that that was already done in 2004 when the Gateway Economic Development Corporation experienced financial problems. 

Lease terms have been adjusted before
“The teams stepped up to the table and renegotiated the leases to make them more publicly friendly. The Cavs and the Indians took on the burden of all the capital and maintenance expenses at the stadium and arena. Anyone of us could find something in the lease we disagree with. If you look at these leases on a national level they’re generally fair. And though it’s not a popular statement for me to make, the teams have been good partners.”

Peter Pattakos disagrees. He led the grassroots Coalition Against the Sin Tax. Pattakos cannot say if his group will continue pushing for the ticket surcharge they proposed to replace the sin tax. But,he says with nearly 80,000 people voting against Issue 7 Tuesday, the opposition campaign gave politicians some ammunition to negotiate better contracts with team owners.

Opponents say losing campaign had benefits for public
“We gave them a bigger fight than they expected, and we brought some critical issues to the forefront. And the owners were never able to explain why the public should subsidize their profitable business on terms established back in the 1990s.”

The Browns, Cavaliers and Indians say they need a combined $160 million in repairs and up-grades over the next 10 years. Cuyahoga County Council will hold hearings this summer to decide how the sin tax revenue, estimated at $260 million over 20 years, should be distributed. 

“We’ll be working with the city to work out the allocations," says County Council President C. Ellen Connelly. "And one thing council has always been concerned about is that the money be used for maintenance and not million dollar loges.”

Sin tax dollars should only go toward maintenance
Last fall, Cleveland City Council approved spending $30 million over the next 15 years for Brown’s stadium upkeep and improvements funded by a combination of sin tax revenues, loans and general fund money. The deal stirred controversy because it included helping to pay for two giant scoreboards. Sin tax opponent Pattakos says despite the tax extension passing, opponents not going away.

“We’ll keep a very close eye on how the sin tax revenues will be spent, and how the public’s obligations to these sports owners are eventually retired.”  

The city and county lease agreements with the Browns, Indians and Cavaliers expire in 2028, seven years before the renewed sin tax expires.

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