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Monday, September 27, 2021

Extension Options in Proposed 15-Year Indians Lease Can Only Be Exercised by City/County If They Come Up With Additional $67.5 Million for Stadium Upgrades

Posted By on Mon, Sep 27, 2021 at 11:52 AM

click to enlarge The 15-year lease extension and upgrades come with a hefty pricetag for the public - CLEVELAND INDIANS RENDERING
  • Cleveland Indians rendering
  • The 15-year lease extension and upgrades come with a hefty pricetag for the public

Legislation will be introduced tonight at Cleveland city council and tomorrow at Cuyahoga county council for the $435 million Progressive Field upgrade and 15-year lease extension package.

The Indians, the state of Ohio, the city and the county announced the broad strokes of the deal in August, which will include $138 million in public funds from the county, $117 million in public funds from the city, and $30 million in public funds from the state. The new lease would run Jan. 1, 2022 through Dec. 31, 2036.



Details, including specific sources for those funds (see end of article), were included in copies of the cooperative agreement made available Friday.

Also included were details of the much-celebrated lease options announced as part of the framework this summer, which were lobbied for by Ohio Gov. Mike DeWine in exchange for his commitment to contribute $30 million in state money to the deal.

"I felt the longer the lease, the better it would be for Indians fans and important for Cleveland and Northeast Ohio," DeWine said in July. "They were talking about a shorter lease, a 15-year lease. What I said is, look, I think we can be helpful but I would like to see a longer lease. They've been working on that, and I'm optimistic of where that's going to go."

Those who believed in DeWine's optimism appeared to be rewarded when the sides announced the deal in August and it included two five-year options that could be executed by the city and county to keep the team in the lease for up to ten additional years, through 2046.

But those who remained pessimistic until all the nuts and bolts were made public turned out to be right.

The legislation that will be introduced this week shows that while the city and county can pick up a five or ten-year lease option, it can only do so if it backs another dumptruck full of taxpayer money up to the Dolans' door on top of the $255 million proposed for the initial stadium upgrades.

"The five-year vesting option will vest at the City’s and County’s option upon Gateway and the City and County demonstrating to the Team, on or before December 31, 2030, adequate and sufficient funding sources to account for an estimated $9 million in annual Capital Repairs during years 16 through 20 of the option period and an additional $67.5 million in Ballpark Improvement Funds to be contributed to the Ballpark Improvement Fund within one year of the public entities exercising the vesting option. If the public entities exercise the five-year vesting option as set forth herein, the Team agrees to contribute an additional $33.75 million to the Ballpark Improvement Fund. Unless mutually agreed otherwise, an additional condition of the public exercising the vesting option will be the provision by the public entities of private and public bond financing for the additional funds to be placed in the Ballpark Improvement Fund. The Team and the public will share in the interest costs for such financing on a 2/3 public – 1/3 Team basis." 
The option to turn the five years into ten is available, but only if by 2031, the year after promising at least $67.5 million in additional upgrade funds and a full four years before the original 15-year lease even expires, the city and county come up with an additional, as-of-yet unspecified chunk of taxpayer money for the Ballpark Improvement Fund.

Fun!

What the city or county's finances look like by then is an open question. Cuyahoga County, whose bond rating was downgraded after the Q deal, is staring down big-ticket projects, not least of which is the likely construction of a new county jail, the estimated pricetag of which is somewhere around $500 million. County Executive Armond Budish last week proposed the idea of indefinitely extending the 0.25% sales tax increase, now set to expire in 2027, initially passed to pay for the Convetion Center. The idea of bypassing the voters to permanently extend the tax was rebuked by Chris Ronayne and Lee Weingart, both of whom have announced runs for county executive.

The Progressive Field upgrade deal hasn't drawn nearly the public outcry or condemnation that the Q Deal raised, partially thanks to grassroots groups that rallied support for a ballot initiative in 2017 sitting this one out after the intimidation and threats they endured from city leaders and power brokers four years ago.

Members of county and city council, few of whom demonstrated themselves as capable of incisive questioning during hearings on the Q Deal, are expected, with the allowance of a grandstanding moment here or there, to speedily pass the pieces of legislation.

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