by Chuck Hoven

     (Plain Press May 2024) Cleveland residents have a right to be skeptical when offering their thoughts about tax subsidies in support of big downtown lakefront and riverfront projects. Specifically coming to mind are the Shore to Core to Shore Tax Increment Financing plans put forth by the Justin Bibb Administration and passed by Cleveland City Council and the rehabilitation of the Cleveland Browns’ stadium.

     The Shore to Core to Shore Tax Increment Financing proposal put forth by Mayor Justin Bibb’s administration projects raising between $3.5 billion and $7.2 billion over the 42-year life of the Tax Increment Financing. If anything is left over after paying interest on the debt and funding infrastructure for lakefront and riverfront development, the Bibb administration and Cleveland City Council have promised that 35% of the leftovers will go to Cleveland neighborhoods.

     With the urging of Mayor Bibb, Cleveland City Council passed Tax Increment Financing (TIF) legislation that would take all the non-school portion of new growth in the property taxes in a district that includes most of downtown and part of the Near West Side and use it for infrastructure development for projects planned for the lakefront and riverfront. The major proposals put forth by private developers that would benefit from this public infrastructure have come from the Cleveland Browns’ owners – the Haslams- – and the Cleveland Cavalier’s owner Dan Gilbert.

     Mayor Justin Bibb and Cleveland City Council also are negotiating with Cleveland Brown’s owners Jimmy and Dee Haslam over the future of the City of Cleveland owned stadium on the lakefront. The Haslams are reportedly asking for $600 million in public subsidies toward the cost of a $1.2 billion renovation of the Browns’ Stadium. The current stadium is less than 30 years old.

NEWS ANALYSIS

     The City of Cleveland administration and Cleveland City Council have promised that if anything is left over after spending TIF revenue on the Shore to Core to Shore Plan, that 35% of the leftovers will spent in Cleveland neighborhoods. Is this promise just to appease Clevelanders and their City Council representatives to get the funds to support projects for the developers of the lakefront and riverfront, or is it a promise that has some substance?

     This seems like something out of the past. Millions of dollars in federal Urban Development Action Grants and tax abatements were given to downtown development projects with a promise that they would create a future revenue stream for the City of Cleveland. That revenue stream never occurred. Recall some of these projects – urban renewal, the Medical Mart, tax abatements to downtown bank headquarters, financing of Gateway and the Cleveland Browns’ stadium. When Cleveland Economic Development Director Tanisha Jackson tried to collect on some of the economic development loans the City of Cleveland had made to developers that weren’t living up to the terms originally set, Mayor Bibb fired her.

     Can we expect the promises of funds for Cleveland neighborhoods to be fulfilled? A look back at promises made in the past would be a good place to start examining the prospects of promises being kept. Veteran Cleveland journalist Roldo Bartimole’s recently published book, Power: Who Governs Cleveland, points out some of the promises made by Mayor Michael White when trying to pass the “sin” tax to support the Gateway development and a new stadium for the Cleveland professional baseball team and a new arena for the Cleveland professional basketball team.

     Referring to Mayor White, Roldo Bartimole says, “In his campaign to sell the ‘sin’ tax, he made promises of 16,000 permanent jobs and tax revenue for the neighborhoods. He promised he’d allow no tax abatement to be given to the stadium and arena and that the Cleveland schools would benefit with $15.6 million in ‘additional taxes’.”

     Roldo goes on to say that a year after the vote for the sin tax, Mayor White went down to Columbus and successfully lobbied the State Legislature to award a permanent tax exemption to the stadium and arena. This meant no money to the Cleveland’s public schools, or the neighborhoods would come from property tax revenue from the new Gateway complex. Most Cleveland residents voted against the passage of the sin tax; however, the vote was county wide, and most Cuyahoga County’s suburban residents voted for the tax to assure its passage.

     In his book, Roldo Bartimole lists many of the past low or no interest loans, tax abatements, Tax Increment Financing, and many other subsidies that went to downtown interests. He shows that in periods when no tax abatements were awarded, development occurred downtown at a rate like that subsidized by tax abatements. 

     In 1995, the City of Cleveland was in danger of losing its professional football team, the Cleveland Browns. While the City of Cleveland owned the old Municipal Stadium, Cleveland Brown’s owner Art Modell secured all the revenue from its use. Having lost a major tenant when the baseball team moved to the new Gateway complex, Modell was clamoring for an upgrade to the stadium which he said would bring additional revenue needed to make the Browns solvent.

     Cleveland Plain Dealer articles from 1995 describe the dire circumstances facing the City of Cleveland during that period. Cost overruns for building the Gateway complex left the project with a $28 million dollar deficit. The Cleveland Municipal School District had been taken over by the State of Ohio because it too was running a huge deficit. A reform School Board that Mayor White had helped to elect was powerless as an administrator approved by the State of Ohio, Richard Boyd, ran the School District. It was a sore point for many Cleveland residents that promised revenue from the stadiums never went to the school system and that huge tax abatements and tax increment financing for downtown interests deprived the schools and neighborhoods of much needed revenue.

     Scrambling to come up with revenue, the White administration proposed a 12% parking tax of which 10% would go to stadium renovation and 2% would go to the Cleveland Metropolitan School District to restore extracurricular activities that had just been drastically cut by the State of Ohio overseers. The parking lot owners pushed back and threatened to put the issue on the November ballot.

     With a deadline set by Art Modell for the City of Cleveland to come up with $154 million for a major renovation of the Municipal Stadium, the White Administration in hopes of adverting a levy campaign, lowered the proposed parking tax to 8% and proposed two other taxes, an increase in the City of Cleveland’s admission tax from 6% to 8% and an increase in the motor vehicle lease tax from $4 to $6. In doing this, White promised that in addition to funds raised for stadium repairs, the funds raised by these taxes would provide $2 million per year to the Cleveland Municipal School District for sports and extracurricular activities.

     From accounts in the Plain Dealer archives, it is unclear why Mayor White chose the $2 million dollar amount. Given the pushback from the broken promise of property tax revenue from Gateway facility, it is a good assumption that the amount was to make up for the tax exemption the stadium would receive under the state law that Mayor White lobbied for a few years earlier.

     While the amounts the new taxes were projected to raise were substantial, they would not prove to be enough for the projected cost of a fully renovated Browns’ Stadium. So, in addition to those taxes, a 20-year extension of the “sin” tax was proposed. Many local leaders would not support it unless it was voted on by Cuyahoga County residents. By the time the vote came in November of 1995, Art Modell had already announced he was moving the football team to Baltimore. The National Football League had promised to allow Cleveland to keep the team’s name and colors. Thus, the vote which passed both in Cleveland and the suburbs was for funds to help build a new stadium to accommodate the Browns under new ownership.

     The extracurricular programs in the Cleveland public schools did receive about $2 million a year for over a decade. Then in the 2010-2011 school budget, Mayor Frank Jackson lowered the amount to $1 million. It remained $1 million or less for the remainder of his tenure in office. In the current budget, Mayor Bibb’s administration allocated 1.25 million for the Cleveland Metropolitan School District’s Comprehensive Extracurricular Activities Program. Over $15 million from the same taxes were allocated to the Brown’s Stadium. Another promise broken.

     The similarity of the financial troubles of the Cleveland public schools in 1995 and the present time are unsettling. The Cleveland Metropolitan School District again is facing a huge deficit. A deficit that one could argue would not exist if the stadiums and arena were paying property taxes.

     The City of Cleveland’s record in keeping promises is poor. When it comes to financing projects that benefit downtown interests, wealthy developers, or professional team owners, they seem to always take precedence over funds for Cleveland’s school children, or Cleveland’s neighborhood residents.

     We don’t know yet, what revenue stream will be proposed to fund renovations requested by the Haslam’s for the Browns’ Stadium. We do know that the City of Cleveland is commandeering an estimated $3.5 billion to $7.2 billion from projected future property tax revenue that would have gone to the City of Cleveland, Cuyahoga County, Cuyahoga Community College, the Cleveland Public Library System, and the Cleveland Metroparks. This will certainly mean that other Cleveland taxpayers will be asked to make up the difference in the revenue growth those taxpayer funded entities will need to sustain their program offerings.

     We can also see from the past performance of the City of Cleveland that there is no guarantee any revenue will be left over for the Cleveland neighborhoods when the developers are finished with their grand plans for the Cuyahoga River front and the downtown lakefront.

     There is also the question of competence. The City of Cleveland has a difficult time taking care of the infrastructure for which it already is responsible. In most cases it does a poor job of maintaining its parks, outdoor pools, and recreation centers. The hours and programming the City offers to citizens at its recreational facilities pale in comparison to most suburban facilities. Long term needs such as housing the homeless, abating lead in the city’s housing stock, code enforcement and paving streets and fixing potholes are some of the many services that residents feel merit more funding and attention from the City of Cleveland.

     The Cleveland Metroparks and the Cleveland Public Library – two of the entities the City of Cleveland would be commandeering revenue from any growth in property taxes over the next 30 to 42 years – have a much better reputation of providing quality services for the tax dollars they receive. The City of Cleveland estimates that the Tax Increment Financing District which extends from Lake Erie on the north to the Cuyahoga River on the south and from the Inner Belt on the east to parts of Ohio City on the west represents 18% of the City of Cleveland’s tax base and 3.5% of Cuyahoga County’s tax base. So, the losses in revenue growth will be significant.

     The City of Cleveland assumes that the growth in revenue will be substantially larger with the infrastructure expenditures it will make in the TIF zone than without those expenditures. Past promises of huge growth from downtown expenditure have not produced the promised results. This Shore to Core to Shore plan will likely result in more of the same.

     Even if the project proves an economic success, what does it provide for the average Clevelander? It seems that creating a playground for the wealthy on the riverfront and lakefront is the goal – how will the average family in Cleveland benefit? If the money was being used by the Cleveland Metroparks to create parkland, more people would benefit than from the upscale housing, retail establishments, and other plans that would largely enhance the wealth of already wealthy developers.

     As for the Cleveland Browns’ Stadium, sell it to the Haslam’s for its appraised value of roughly $270 million. Allow the new owners to rehab the current stadium or build new. Require that the new owners pay property taxes and stop all subsidies to the stadium. Use the taxes that now pay for stadium debt and stadium repairs to fund programs in the Cleveland Metropolitan School District. It is time for the City of Cleveland to get out of the business of owning a stadium.

     If City Council wants to assure a healthy return on the $3.5 to $7.2 billion, it will secure from the Shore to Core to Shore Tax Increment Financing, it would shift the dollars to funding the education and the health of Cleveland’s children – via funding the Cleveland Metropolitan School District, Cuyahoga Community College and Cleveland State University. The true way to growth in the Cleveland economy is to invest in our children and young adults. It is the only economic growth strategy that will prove fruitful over the long term. If we don’t improve the quality of our educational system and services that help children and their families, Cleveland will remain one of the poorest cities in the nation and no amount of new infrastructure will change that designation.

     When one compares cities with healthy economies to Cleveland, it would be best to consider the quality of their educational systems from preschool through post-secondary educational or union apprenticeship opportunities and the services the services those cities offer to families and children. In doing so, Cleveland City Council will find that educational quality far outweighs any impact from a Tax Increment Financing district, or sports facilities in determining the health of a city.

Cleveland, Columbus, and Cincinnati Educational Attainment levels

For those age 25 years or older: United States Census Quick Facts 2018-2022

United States          Cleveland                 Columbus                Cincinnati

Average                     Average                     Average                     Average

% High School +      % High School+       % High School+       % High School+

89.1%                         82.9%                         90.3%                         89.1%

Bachelor’s Degree + Bachelor’s Degree + Bachelor’s Degree + Bachelor’s Degree +

Average                     Average                     Average                     Average

34.3%                         20.3%                         38.3%                         40.5%