Questions linger around mayor's FC Cincinnati stadium proposal

Posted at 3:22 PM, Nov 28, 2017
and last updated 2017-11-29 07:35:06-05

CINCINNATI -- After months of uncertainty, Cincinnati City Council finally got a chance on Monday to ask their first public questions about how tax money could be spent on an FC Cincinnati soccer stadium project.

Despite a 4 1/2-hour meeting Monday, many big questions still linger about how many jobs a new soccer stadium will create, if the city is assuming debt to pay for the project, and who will pay for cost overruns.

As city council prepares to take a final vote on the stadium project on Wednesday, WCPO analyzed six key questions that remain.

Will tax money be used on the project?

“We are not putting one penny of taxpayer dollars into the stadium,” Mayor John Cranley said Monday.

It’s correct to say that no tax money will be spent on the actual stadium, as the team has agreed to privately finance the $200 million stadium.

City Hall, however, will tap into a pot of tax money to build the infrastructure needed for opening that stadium.

Cranley’s stadium project plan, released Monday, includes $2.5 million from the city’s capital budget in 2019 -- that’s the same money the city uses to pave roads, buy new police cruisers or maintain the city’s bridges, including the Western Hills Viaduct.

That money comes from property taxes Cincinnati’s residents pay as well as income taxes workers in the city contribute.

The $2.5 million Cranley wants to use for the stadium project takes just a small bite out of the city’s annual capital budget -- but the city’s capital budget is getting tighter every year.

In 2017, city leaders set aside $90 million for capital needs.

In 2019, the city could have as little as $64 million on hand, according to budget projections.

The city will also use another source of tax money to fund the project: hotel taxes, which are used to fund tourism activity, including maintenance and rehabilitation of the Duke Energy Convention Center.

Since out-of-town visitors pay these taxes, they are not typically viewed as a burden on residents living in the city.

“People who live here don’t stay in hotels," Cranley said. "It is not something that is coming out of your pockets."

Will the city take on any debt to pay for the stadium project?

Cranley says no. In a speech to city council on Monday, he said the reason he wants to spend $7.3 million from the Blue Ash Airport sale on the stadium project is to avoid taking on any debt.

“Let’s not forget that the reason I’m proposing those dollars is that I don’t want there to be any debt left from this deal to be paid for by successors in the future,” Cranley said.

But that’s not entirely true.

Councilman Chris Seelbach zeroed in on this at Monday’s meeting.

The city is offering to spend $7.25 million from two tax increment financing (TIF) projects in Oakley. That money would be spent on roads, sewers and other infrastructure improvements needed for the stadium.

How does tax-increment financing work?

When multiple developers build in area, property values go up. The city takes the extra tax money from the increased value of those properties and puts it toward paying off the related public infrastructure. 

The problem: There isn’t $7.25 million in TIF funding currently available.

So the city has to issue debt against future revenues, deputy city solicitor Luke Blocher said Monday.

"So we are borrowing money for this TIF district?” Seelbach asked.

Blocher responded: “Yes, to have that total amount of money, you'd have to issue debt against the future revenues of that project.”

“So we are taking on debt?” Seelbach asked again.

“Debt serviced by the TIF district, not debt backed by the city,” Blocher said. 

“But its still debt,” Seelbach said.

As of last week, the cash balance in the Oakley TIF District was $806,062.47.

How much will road improvements around the stadium cost?

FC Cincinnati leaders have asked the city and county to chip in $75 million for a parking garage, sewer lines, road improvements and other infrastructure needs.

But stadium opponents and some city council members are criticizing this vague dollar amount, because no one knows what exactly it pays for.

“The real price tag on the project isn’t available to anyone,” said Jeff Capell, chairman of the group, No More Stadium Taxes.

“Legislation is asking for $75 million for so-called infrastructure, but it’s quite short on details,” Capell said. “We’re told that the work has to get done anyways. But the so-called stadium infrastructure includes road widening work a half mile away from the proposed stadium site.”

Even city engineer Don Gindling doesn’t know how much new roads will cost.

“Until a traffic impact study is done, we’re just guessing on what road improvements need to be done,” Gindling told city council on Monday.

Gindling estimates a price tag of $12 million to $15 million in road improvements, “just to make sure the stadium opened,” with another $70 million to $85 million spent later, depending on future development around the stadium.

“And that’s just road improvement,” Councilwoman Yvette Simpson said. “That’s a big range … Can you help me understand why that range is so wide?”

Gilding said he couldn't provide more details until a traffic study is done. 

Who pays for the entire $75 million stadium infrastructure cost?

This is perhaps the biggest question looming over the stadium project as leaders prepare for a final vote on Wednesday.

Hamilton County Commissioners are expected on Wednesday to approve a $15 million parking garage for the stadium.

Meeting separately on Wednesday, city council will vote on spending $37 million for other infrastructure needs for the stadium.

If both projects pass, that would mean city and county leaders commit $52 million to the stadium project – which is at least $20 million short of the $75 million FC Cincinnati said it needed.

“Whose responsibility is it to fill the remaining gap?” Simpson asked at Monday’s meeting.

The city of Cincinnati is only on the hook for $37 million, Blocher said, and is not responsible for cost overruns.

Seelbach repeatedly asked how the city might cover the millions in potential shortfall. But he never got any real answers.

“Does anyone have the slightest idea where that extra money would come from?” Seelbach asked. “Are we just going to build a road halfway? Or gravel the rest of it? Or the parking garage won’t be sturdy? It seems like that is a real possibility since we don’t even get close to the $75 million dollars that we were told was needed to get the infrastructure set for the stadium.”

Councilman Charlie Winburn said the details would be worked out later in a development agreement.

“I’m convinced that Mr. Berding and his team, they’re not going to try and rip the taxpayers off,” Winburn said.

FC Cincinnati general manager Jeff Berding said other solutions may be found – such as asking the state of Ohio to pay for road improvements, or building a smaller than ideal parking garage in the short term.

But even Berding admitted, “Right now I acknowledge there is a level of uncertainty.”

Will the stadium create thousands of jobs?

“It will support, literally, thousands of new jobs,” Cranley said of the stadium project Monday.

But once the stadium is built, FC Cincinnati won’t support “thousands of new jobs.”

Construction of the stadium is expected to employ as many as 2,600 workers -- but those are full- and part-time jobs, many of which won’t last beyond the first two years of the field’s construction, according to an economic impact report the team commissioned in May.

Beyond that, FC Cincinnati will employ a few hundred workers to manage or play on the team, run the stadium and assist on game-day operations, according to the same economic report.

FC Cincinnati’s presence and stadium would translate into 320 jobs -- total -- by the team’s fifth year in the MLS, the report predicts. It’s unclear how many of those jobs are part-time or seasonal jobs.  

Cranley’s proposal calls for FC Cincinnati to get a job creation tax credit. Under a job creation tax credit, companies receive a certain percentage of the earnings tax their employees pay to the city.

Typically, when companies apply for that credit they must provide creation and income projections to the city.

WCPO requested FC Cincinnati’s job projection figures from the city, but the city has not responded to that request.

Officially, it’s unknown how many jobs FC Cincinnati’s MLS status will lead to -- or what they’ll pay.

The stadium itself won’t create thousands of new, long-term jobs but Cranley insists the infrastructure the city plans to pay for will encourage more development. He’s hoping other businesses are lured to the site once FC Cincinnati’s stadium goes up.

“I promise that we will be announcing thousands of jobs if we make this commitment to this public infrastructure,” Cranley said. “I’m in discussions with a number of employers who would come to this site if the infrastructure is made available.”

Only time will tell how many jobs actually settle there.

Remember, the space between Paul Brown Stadium and Great American Ball Park sat void of any major employer for 15 years before General Electric opened its global headquarters at The Banks in 2016. The company now employs roughly 1,000 workers there.

Will homes be demolished to make way for the stadium?

Will the city need to acquire then demolish homes to expand Madison Road and make way for new stadium traffic in Oakley?

“It seems those houses that would be required to be demolished,” Councilman Chris Seelbach said Monday. “That’s just a concern.”

City officials told Cincinnati City Council Monday they simply don’t know yet. Gindling, the city engineer, called home demolition for the project a “possibility.”

A mega-church, popular brewery, stores and restaurants already create congestion on the roads around Oakley Station and Center of Cincinnati.

Cranley’s FC Cincinnati stadium plan also calls for an expansion of Madison Road between Ridge Road and Kennedy Avenue. Roughly two-dozen homes currently line that road.

Here’s a satellite view, taken from Google maps: