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11 THINGS TO KNOW ABOUT THE PROGRESSIVE FIELD DEAL, WHICH CLEVELAND CITY COUNCIL PASSED MONDAY
AT ITS MEETING MONDAY
night, Cleveland City Council passed legislation greenlighting the Progressive Field Deal, a 15-year lease extension with the Cleveland Guardians that includes roughly $285 million in public subsidies for ballpark maintenance and improvements. Council voted 13-3 in favor of the ordinance, with Ward 8’s Mike Polensek, Ward 11’s Brian Mooney and Ward 15’s Jenny Spencer dissenting. Ward 14’s Jasmin Santana was not in attendance and did not cast a vote.
The city’s portion of the deal will include roughly $8 million per year over 15 years, sourced from admissions tax revenue at the ballpark, (revenue that would otherwise go to the city’s general fund), a sports facility reserve fund created as part of the Q Deal, revenues from the Gateway East parking garage, and about $350,000 per year that remains unsourced and will likely be taken out of the city’s general fund.
Cuyahoga County Council has already authorized its portion of the deal. The county agreed to pay $9 million per year over 15 years, which includes substantial annual contributions from the general fund. It also authorized a $202.5 million bond issue to finance what are referred to as “ballpark improvements.” These are the proposed dramatic upgrades at the stadium like the re-imagined Terrace Club and upper deck; not the humdrum capital repairs on escalators, HVAC and plumbing, which the public will also pay for now.
Despite the buoyant, demented rhetoric from a few county council members earlier this month — Marty Sweeney said he thought the deal should be considered the “prototype” for negotiations with pro teams moving forward — most voted in favor of the legislation more reluctantly. The impression was that they were doing so on pain of death, imprisoned by an economic reality in which the teams made all the rules and called all the shots. Councilman Dale Miller said the national system of stadium financing was broken, but that paying $200 million for upgrades seemed more prudent than paying a billion or more for a new stadium down the road. (The fact that the public, not the team, issues the bonds for these mega deals, and must therefore service the debt on them, is one of the big reasons why they’re so lopsided, by the way. Remember that the Q Deal was billed as a 50/50 split between the public and the Cavs at the outset, and in fact it’s now customary for leaders to say that owner Dan Gilbert paid much more than the public because he personally financed additional upgrades in 2018. But once you account for the interest payments, the public is paying far more. The enormous debt load the county took on to finance the Q Deal was one reason why Moody’s downgraded its bond rating, leading to higher interest rates and higher costs for taxpayers.)
Prior to Monday’s meeting, city council committees met twice – nearly nine total hours of hearings – to vet the deal. Council members questioned Ken Silliman of the Gateway Economic Development Corporation, (formerly Mayor Frank Jackson’s Chief of Staff), and reps from the Guardians legal, strategy
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and community impact teams to determine whether or not it was in the city’s financial interest to vote yes.
Though a number of questions lingered, the majority ultimately agreed with the consensus: that unsavory as it may be to give hundreds of millions of public dollars to a billionaire team owner, that’s just the cost of doing business.
Here are 11 key takeaways from the committee hearings.
1) The deal was done long before it arrived at City Council. No further “negotiating” occurred.
Though council was eager to zoom in on minority employment numbers as proposed by the city’s standard community benefits agreement, and to express reservations about the exposure of
DIGIT WIDGET
17.27%
Percentage of Cuyahoga County children ages 5-11 who have started their Covid-19 vaccination, as of Monday.
8,000+
Total employees at MetroHealth, up from 6,200 in 2013 when CEO Akram Boutros took the reins. Boutros announced this week that he’ll be stepping down at the end of 2022.
$541 million
Combined public spending on the Opportunity Corridor ($256 million) and the Progressive Field Deal ($285 million).
$511 million
City of Cleveland’s total allocation from the American Rescue Plan Act (ARPA). general fund dollars, the deal’s main structure—with the public paying for 2/3 of ballpark improvements and the team paying for 1/3, and the public paying for 100% of capital repairs—is final and unshakeable, evidently.
Ken Silliman said that this ratio of public vs. team contributions was arrived at after intense negotiations. (We’ll have to take his word for it!) In response to questioning from Collinwood councilman Mike Polensek, a hardened skeptic of these deals, Silliman affirmed that this was the best the public could hope to achieve. It was therefore folly for council members to suggest lowering the public contribution somehow, or attempting to modify the deal with safeguards for the general fund. As with the Q Deal, council has only two options: vote yes or no.
2) No one from the City of Cleveland’s law department participated in “negotiations.”
No one from the City of Cleveland’s law department was present during two years of meetings on the Progressive Field deal, it was revealed at the second committee hearing.
Jim Gentile, the city’s interim director of finance, was representing the Frank Jackson administration. He told council that both he and Sharon Dumas, former finance director and Jackson’s current chief of staff, had been present at a number of the meetings. Gentile estimated that he was physically present at seven or eight total meetings, but said no one from the city’s law department was ever present when he was there. The Greater Cleveland Partnership, the city’s chamber of commerce, was more directly involved than the city’s legal staff.
In response to some wide eyes, Gentile stressed that both he and Dumas regularly briefed the law department after their meetings. And he assured council that the law department had indeed read the term sheet, which outlines the city’s contributions. But the law department appeared to play no part in the authorship of the agreement.
3) An awful lot depends on the Gateway East parking garage
Of the city funding sources, the diciest by far is the revenue from the Gateway East parking garage, which the city owns. The deal’s term sheet projects that the garage will generate $2 million per year over 15 years. But if the garage falls short of those projections, the city’s general fund will have to make up the difference. That’s almost guaranteed to happen, given that in 2019, the final year before the pandemic, the garage generated only $1.6 million in net revenue.
Ken Silliman said that City Council has the authority to increase parking rates there and that with “inflation,” the garage can be expected to surpass its projections in the future. Those guesstimates mean jacksquat.
Council has reason to be suspicious, in fact, given that the deal includes a team-friendly provision which allows the Guardians to purchase the garage from the city for $25 million if and when they determine that it’s profitable to do so. (The team’s legal counsel was upfront that they simply aren’t confident in the benefits of acquiring the garage currently.) If they ever do proceed with the purchase, the proceeds would be stashed in an account and then simply paid back to the team as a $2 million annuity. The city will lose 100% of the proceeds from this revenue-generating asset either way.
To be fair, it’s not like revenue from the garage has been going to the city’s general fund until now. Quite the contrary. The entirety of that revenue has been paying down debt on bonds the city took out in the 90s to construct the Gateway garages for the teams in the first place. Those bonds are scheduled to be paid off in full in Sept. of 2022, after which the revenue will be encumbered through 2036 or else gone forever.
4) The Gateway East parking garage could soon have a corporate sponsor. In fact it better.
The deal’s term sheet includes $330,000 per year in city contributions generated by “naming rights” for the Gateway East garage. No naming rights have yet been secured, but Silliman made it seem like tracking down a corporate sponsor would be no big deal. As projected, these naming rights would have to net about $5 million over 15 years—all of which would go directly toward the deal—and if the city can’t find a sponsor to foot the bill at that rate, it’ll be the general fund forced to make up the difference once again.
5) Speaking of naming rights ...
At least one council member was keen to point out that it was the Indians, not the public, profiting off a much more lucrative naming-rights deal: the one with Progressive Insurance that nets the Guardians $3.6 million per year for stadium naming rights and sponsorship agreements therewith.
Both Ken Silliman and the Guardians General Counsel, Joe Znidarsic, explained that when the team’s lease was renegotiated in the early 2000s, the team agreed to pay for the operating costs of the Gateway Economic Development Corporation, and in exchange received the right to pursue naming rights deals. Silliman argued that “when the dust settled,” the public, (or at any rate Gateway) came out ahead.
That’s certainly subject to interpretation, as in the term sheet for the current deal, the team agrees to pay about $1.4 million per year towards Gateway operations, $1.1 million toward Gateway property taxes— NB: the teams pay taxes only on the land, not on the value of the buildings, one of the most generous subsidies of all—and $656,000 in “rent” (lol). That’s about $3.1 million total. Incidentally, the team includes these payments as part of its contribution toward the deal. But it will only contribute $4.5 million per year toward ballpark improvements. And it will no longer be covering capital repairs under $500,000, (an expense estimated at $2 million per year.)
6) The deal includes $42 million to renovate the team’s administrative offices.
Guardians Senior VP and Chief Information Office Neil Weiss presented the scope of work for six major ballpark improvements that should dramatically change the Progressive Field experience when complete. It is these six projects that will be funded by the County’s $202.5 million bond issue. Among them are the total re-imagining of the left field Terrace Club restaurant, a new upper deck concourse experience, a transformed dugout and press box, and significant modernizations of the clubhouse and service areas.
The final project, euphemized as a “dramatic new front door to Gateway Plaza,” is essentially a massive renovation of the team’s administrative offices, which the public paid to construct and lavishly outfit in the original Gateway deal. This project would include the construction of a fifth floor atop the existing structure, updates throughout the building, the construction of a “community space” between the administrative building and the stadium, and, if history is any indication, no shortage of high-
end furnishings.
Weiss said that the Guardians have 3.5 times as many employees as they did in 1994 and have simply run out of places to put them. Sad! The team’s $4.5 million annual contribution to ballpark improvements is rendered especially paltry when you consider that they’re getting a brand-new office space in addition to the stadium improvements.
One risible defense of these socalled “Gateway plaza” renovations, in terms of public benefit, is that the “community space” between the team offices and the ballpark will include a conference center that could be available for public use, perhaps as a meeting space for CSMD or Cleveland City Council.
7) West Park Councilman Charles Slife is still “salty” about the Flats East Bank 60-year TIF.
Councilman Slife had a number of marquee quotes from the first committee hearing, and in general asked questions that got to the heart of the deal and its imaginary public benefits. He wondered, for example, whether admissions taxes were intended to be invested back into the sports facilities that generate them.
Silliman admitted that no, admissions taxes were designed as revenue sources for the general fund. Parking taxes, though, Silliman said, were designed to fund the Browns stadium as part of the “Save the Browns” campaign.
Come to think of it, the Gateway East parking projections bothered Slife, he said, because the recent ludicrous 60-year Tax Increment Financing arrangement granted to the Wolstein Project in the Flats was still fresh in his mind. That subsidy was handed to Wolstein to help with his cash flow problem, in part because parking revenue on the East Bank had fallen short of projections.
Had things like rideshare been considered when creating the Gateway East Garage projections, Slife asked (as it hadn’t in the Flats East Bank projections)? And shouldn’t City Council be encouraging alternative transportation modes, from a sustainability perspective?
“It’s like we’re saying, ‘drink and drive, we’ve got a stadium to pay for,’” he said. “That’s a joke, but I’m trying to understand how we’re defending against that mixed messaging.”
Slife voted in favor of the 60-year TIF back in December and voted along with his colleagues to approve the Progressive Field legislation Tuesday, but he nevertheless voiced the concerns of residents who, after decades of stadium deals, have failed to see a return on investment.
“We’re like a corporation that keeps buying shares but never pays the dividend,” he said. “We need to show that we’re more than just a microloan bank. Residents are frustrated. They’ve seen deal after deal after deal, and it’s not resulting in better city services.”
8) Bad arithmetic leads to bad logic.
Many council members leaped at the prospect of absolving themselves for what will be yet another morally bankrupt vote by pretending the math of the deal was in the public interest. In a typical year, Silliman said, the team generates $9 million in tax revenue. And in the term sheet for the Progressive Field Deal, the city contributes $8 million per year.
“So that’s a one million dollar benefit to the public!” Councilman Kerry McCormack all but yelped.
No.
In the first place, a $9 million benefit to the public becoming a $1 million benefit to the public is another way of describing an $8 million deficit.
In the second place, the $9 million that the team “generates” is not money that the team pays directly. The largest portion it does, via the admissions tax, but the city will now be foregoing half of that to pay back to the team. The other tax revenue comes from income taxes, parking taxes, and hotel bed taxes. A percentage of the parking tax revenue will be paid back to the team now as well, given that 100% of the Gateway East garage revenue will go toward the deal.
9) The team intends to create a “peer review equity group” to ensure that the team adheres to minority hiring targets throughout the process.
Neil Weiss said the team had met with both Norm Edwards of the Black Contractors Group and the Cuyahoga County Citizens Advisory Council on Equity. He said the team intended to form an equity group, consisting of perhaps 4-6 members, that would theoretically hold the team accountable on hiring goals, prevailing wages, apprenticeships and the like. Beyond the city’s standard memorandum of understanding on hiring, there is no additional community benefits agreement included in the deal.
clevescene.com
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10) Demolition for ballpark improvements could start within a year.
Assuming the legislation passes, as it almost certainly will, Neil Weiss said that the team would like to be underway with the first of its major improvement projects by this time next year. The re-imagining of the left field Terrace Club looks to be first on the list.
11) Tom Yablonsky got got.
The neighborhood development guru Tom Yablonsky, who recently retired from his perches at the Historic Gateway Development Corporation and the Downtown Cleveland Alliance, gave a familiar presentation about the splendor and vitality of downtown since the arrival of the Gateway complex. Downtown was an empty wasteland before the arenas, he pronounced. Just look at the images!!!‹
Councilman Mike Polensek advised Yablonsky—though Yablonsky surely knew—that the photo used to illustrate the desolation of downtown before Jacobs Field had been taken after the demolition of a number of buildings to make way for the ballpark.
-Sam Allard
Felony Charges Dropped in “Outrageous” TownHall Megaphone Assault Case
Cuyahoga County prosecutors have, at last, dismissed one of the more outrageous felony indictments in recent memory. Twenty-twoyear-old Sydney Yahner had been charged with felony assault and menacing for using a megaphone at a protest in July of 2020 at the TownHall eatery in Ohio City and for allegedly causing permanent hearing damage to a manager there.
Prosecutor Michael O’Malley’s office dismissed the charges this month before the case was scheduled to go to trial. Yahner could have faced up to eight years in prison if convicted.
Her defense attorney Peter Pattakos described the indictment as a retaliatory legal maneuver undertaken by a wealthy and politically influential family, the Georges. Bobby George, with whom Scene has had prior legal disputes, owns and operates TownHall. The manager who alleged that her hearing had been permanently damaged by Sydney Yahner’s amplified voice is Jacqueline Boyd, Bobby George’s first cousin.
“Every decent citizen of this state should be terrified by the fact that their government would charge protesters for committing felony assault with the soundwaves issued from megaphones, based on nothing but facially ridiculous and easily disprovable lies by politically influential multi-millionaires who admitted that they didn’t like the speech that was coming through those megaphones and would do whatever was within their power to muzzle it,” said Pattakos, in a statement. (Pattakos provided legal representation to Scene in its dispute with Bobby George.)
Yahner was initially indicted alongside another protester, 24-year-old Josiah Douglass, but charges were dropped against him in the weeks following the indictment. Both were members of the activist organization With Peace We Protest.
The TownHall demonstration was the third of three staged outside restaurants owned by Bobby George and/or his father, Tony George. These were organized during a summer of widespread racial justice protests in the aftermath of the death of George Floyd.
Prosecutors dropped the charges against Yahner after two experts confirmed that Boyd suffered no permanent hearing damage. The weaponization of the megaphone had been the basis of the felony indictment.
Yahner expressed gratitude and relief in an official statement posted as part of the Pattakos Law Firm’s press release.
“There are so many people trapped in the criminal justice system because they didn’t have the support and resources that I’ve had,” she said. “Without the fearless and generous efforts of my attorneys and the outpouring of support I received from my family and community, I could have easily been scared into taking a plea for a crime I didn’t commit. I will forever stand in solidarity with those who have been falsely charged of crimes and will work to advocate against the blatant abuse and misuse of public resources represented by my prosecution.”
