COLUMBUS, Ohio—Ohio lawmakers have drafted budget language detailing how they might authorize $600 million in state-issued bonds to help pay for a new Cleveland Browns stadium in Brook Park.
Under the draft amendment, drawn up by the Ohio Arts, Athletics and Tourism Committee, state limits on stadium funding would be relaxed so that the bond money could cover a quarter of the expected $2.4 billion cost to build the new, covered stadium near Cleveland Hopkins International Airport.
Under the Browns’ plan, presented earlier this month to the Arts, Athletics and Tourism Committee, the state-issued bonds would be repaid with state income, sales, and commercial activities tax revenue from the stadium and the proposed $1 billion mixed-use development surrounding it.
Another $1.2 billion would be provided by team owners Jimmy and Dee Haslam, and $600 million would come from local governments (though the latter idea, so far, hasn’t been well-received by county officials).
Under existing Ohio law, state funds can only be used to cover up to 15% of the initial estimated construction cost of an Ohio sports facility. The proposed budget amendment would raise that limit to 30% for “transformational major sports facility mixed-use projects.”
The draft amendment states the bonds wouldn’t be able to mature for at least 25 years; the Browns’ plan calls for issuing 30-year bonds.
Over the life of those bonds, the Browns estimate that the stadium project will generate $2.9 billion in state tax revenue -- enough to cover the cost of the bonds and put excess money in state coffers.
The revenue, as defined by the proposed budget amendment, would include money collected via state sales and use, income, and commercial activity taxes above what tax revenue was in the area before work on the stadium project began. Tax revenue from construction on the stadium and surrounding development, such as sales taxes on construction materials, would count toward the total.
However, some experts have questioned whether the team’s projections are overly optimistic and if the stadium and surrounding development can generate revenue fast enough to pay off the bonds.
To address such concerns, the Browns have offered to provide $38,250,000 in “upfront” cash that would be tapped if revenue from the stadium project and surrounding development doesn’t cover the bond costs. That amount would grow through interest to nearly $150 million by 2054, according to the Browns’ estimates.
In addition, for a stadium bond issue to move forward, the Ohio Facilities Construction Commission -- in consultation with the state’s budget and tax offices -- would have to conclude that new tax revenues generated from the project would be more than the cost of paying off the bond debt, under the proposed amendment.
The terms of the Browns’ offer to build a Brook Park stadium are reflected in the parameters of the draft amendment, which would apply to other future projects.
For example, under the amendment, pro sports teams would be required to put money equal to 5% of the state bond proceeds into escrow to use to make up for any revenue shortfalls to pay off the bonds, and the team looking to use the new stadium would also have to pay for at least 50% of the project cost.
The measure is one of thousands of proposed budget amendments submitted by House members to the Ohio House Finance Committee, which is scheduled to make its first round of revisions next week to Gov. Mike DeWine’s massive, two-year state budget plan.
State Rep. David Thomas, an Ashtabula County Republican who serves on the Art, Athletics and Tourism Committee and provided a copy of the draft amendment to The Plain Dealer and cleveland.com, said it’s “very possible” there could be other Browns stadium-related amendments submitted. But so far, Thomas said, he hasn’t heard of any.
DeWine’s budget, introduced last month, calls for a completely different stadium-funding plan: to double the state’s tax on sports-betting companies, from 20% to 40%, in order to create an ongoing revenue source not just for the Browns’ stadium project, but other stadium projects in the future, as well as youth sports.
However, House Finance Committee Chair Brian Stewart, a Pickaway County Republican, said earlier this month that the Finance Committee will remove DeWine’s stadium-funding plan and replace it with the Browns’ bond proposal.
The reason, Stewart said, is that House Republicans – who hold almost two-thirds of House seats – are uneasy in general about raising taxes.
The text of the draft amendment was first reported by Ohio Public Media.
Jeremy Pelzer covers state politics and policy for Cleveland.com and The Plain Dealer.