CINCINNATI — The Ohio Senate has proposed a new funding source for stadium projects that gives Ohio residents one more reason to check the state’s unclaimed funds list.
Whether the plan will bring new state funding to the Cincinnati Bengals or FC Cincinnati remains to be seen.
Senate Finance Committee Chairman Jerry Cirino, R-Kirtland, unveiled the plan Tuesday. It calls for $1.7 billion in unclaimed funds to pay for stadium and cultural facilities, starting with a $600 million “performance grant” for the Cleveland Browns’ planned new stadium in Brook Park.
Before it becomes law, the proposal must survive the scrutiny of a House-Senate conference committee and Ohio Governor Mike DeWine, who previously proposed paying for stadium improvements with increased taxes on sports betting.
The House rejected DeWine’s idea when it authorized the state to issue $600 million in bonds for the Browns, who promised to pay the money back with increased tax revenues from its $2.4 billion stadium project.
Critics complained the House budget proposal was based on unrealistic revenue projections from the Browns. Ohio’s budget director questioned whether Ohio had enough debt capacity to do the deal.
That caused members of the Senate to start looking for other ways of financing stadium projects, including two new sports betting proposals and a bill to legalize iGaming, to allow bettors to play lottery and casino-style games on their phones.
Cirino's idea taps into a different stream of state funds than gambling taxes: Unclaimed funds.
Ohioans are currently owed $4.8 billion from uncashed checks and insurance policies, rent or utility deposits and closed bank accounts, according to the commerce department’s division of unclaimed funds.
“We’re very confident this is going to work,” Cirino said. “We’re very confident we’re not putting any of the state’s assets or credit ratings at risk. And we feel it’s a very creative way to do this, to use money that is not working for us right now.”
Although the division “works diligently to track down the rightful owner,” Ohio still receives more unclaimed funds each year than it pays out in claims from those rightful owners.
That’s why Cirino thinks the money should be put to work on a new stadium in Cleveland, described in the state budget as a “transformational major sports facility mixed-use project” that includes a domed stadium and development district.
“What we've developed is a plan called a performance grant … that will last for 16 years,” Cirino said. “And for each of those 16 years, we outline the incremental taxes that the new stadium and mixed-use development associated with that will provide to the state through income taxes, sales tax, and (commercial activity tax).”
The plan is intended to verify that Ohio receives increased tax revenue of at least $600 million, Cirino said. Every four years, the state will do a “true-up” assessment which could lead to additional payments from the Browns from a $50 million escrow fund and $50 million credit line that would be established before the grant is made.
“At the end of the 16-year period, or earlier if the incremental tax revenues come in faster and larger than we had anticipated, the arrangement will be over,” Cirino said. “If there's anything left in their escrow accounts, it gets returned to them.”
Budget documents indicate the Browns could have access to the funding by February through a newly created Ohio Cultural and Sports Facility Performance Grant Fund, which will also receive $1.1 billion in unclaimed funds for use in other projects.
“One of the criticisms early on of this project was that, how are you going to take care of everybody else? We know there are going to be other projects coming down the road and want to be able to have funds set aside in order to take care of them,” Cirino said.
But here’s where things get murky.
A summary of the Senate changes, prepared by the Ohio Legislative Service Commission, makes it hard to see how the Bengals or FC Cincinnati might qualify for state funding.
For example, the LSC summary says performance grants will “pay or reimburse to up to 25% of the estimated construction costs of a major sports facility.”
The Bengals have requested $350 million from the state, or 42% of Paycor Stadium’s $830 million renovation cost.
The Senate version also adopts the House definition of a “major sports facility,” which includes a professional sports venue with a construction cost of more than $1 billion for new stadiums or renovation costs of more than $100 million.
FC Cincinnati wants to be reimbursed for 30% of construction costs on its planned $332 million mixed-use development near TQL Stadium, not the stadium itself.
The Senate version also left unchanged House language that "authorizes the legislative authority of a municipal corporation located in a county with a population greater than 1,000,000 to declare one and only one area of the municipal corporation to be a transformational major sports facility mixed-use project district."
That's a problem for both teams because Hamilton County has fewer than 1 million people and both stadium sites are in Cincinnati.
Finally, the Senate version requires the state to establish “a schedule under which increased tax revenues” will be paid over 16 years and establish a development district where businesses agree to “tax reporting requirements” and property owners “sign a petition” to participate.
That might be easier to accomplish for FC Cincinnati, which is the developer of a mixed-use project next to TQL Stadium, but not as feasible for the Bengals, which has limited property rights at The Banks.
The WCPO 9 I-Team tried to reach several Senate staffers, Hamilton County officials, a lobbying firm that represents the county and FC Cincinnati, and the Cincinnati Bengals. None could answer with any clarity whether the new Senate proposal will be a help or hindrance to the teams’ quest for state funding.
But the I-Team was able to find one additional Senate proposal that could bring new funding to the Bengals renovation. It allows Hamilton County to enact a cigarette tax “for the benefit of an arts and cultural district,” including The Banks riverfront development. The proposal was submitted by Sen. Bill Blessing, R-Colerain Township.
“Cuyahoga has had this sin tax language for years,” Blessing said. “The House added an amendment to allow it for Summit, so I added Hamilton. Cuyahoga does use this in part for stadium funding.”
