NEWS

Tax money for arena upgrade? It's a tough sell

Dan Horn, and Sharon Coolidge
Cincinnati
The proposed new arena on Cincinnati's riverfront, after a $250 million to $350 million renovation

How important is it for the region to have a better arena? Have your say at the bottom of this story or in the comments. 

The owners of U.S. Bank Arena invited Cincinnati to a big party Tuesday when they announced they'd won a bid to host the NCAA men's basketball tournament for the first time in a quarter century.

Turns out, though, the party is BYOB: Build Your Own Building.

The bid for the tournament is contingent on Cincinnati and Hamilton County taxpayers coming up with at least some of the money for a reconstruction of 40-year-old U.S. Bank Arena, which could cost as much as $350 million. How much public money isn't clear, since the arena's owners haven't said what they're willing to invest and how much help they'd need.

NCAA tournament returning to Cincinnati? There's a catch

It may not matter. The Enquirer found that the idea of ponying up cash for a new arena isn't popular among city and county officials already on the hook for about $1 billion in pro stadium costs.

While they like the idea of a new arena and all the cool stuff that comes with it, such as the first two rounds of March Madness in 2022, they are considerably less fond of explaining to voters why they want to spend more money on another riverfront sports facility.

"We already own two stadiums. We are full-up on stadiums," said County Commissioner Chris Monzel, a Republican. "There's got to be another way. To me, it rests with the owners and whether they want to make an investment."

Commissioner Todd Portune, a Democrat, said his message to the arena's owner, Nederlander Entertainment, has been consistent since the company first floated the idea of using some public money for a $200 million renovation in 2015.

"Go do it. It's your arena," Portune said Wednesday. "We'll be happy to help with permits and zoning, but don't think that the county has a pot of money over here that we're waiting to make available."

City officials also seem chilly to the idea. Mayor John Cranley was out of town and couldn't be reached Wednesday, but Councilwoman Yvette Simpson, one of Cranley's opponents in the mayoral election this year, said she's opposed to tax money for the arena.

"I don't support public dollars on this project," Simpson tweeted Wednesday.

Council members Kevin Flynn, a Charterite, and Amy Murray, a Republican, said they'd like to see improvements to the arena, which suffers from out-of-date luxury boxes and other amenities. But they don't see many options for public help beyond tax breaks and incentives.

"It would be very difficult to commit public money," Murray said. "I don't get the feeling from citizens there is interest in a tax increase."

Nederlander, however, remains optimistic something can be worked out. Chief Financial Officer Ray Harris said the company now has preliminary plans to tear down the existing arena and rebuild a state-of-the-art 19,000 seat facility on the same site next to Great American Ball Park.

Harris said he's been discussing with city and county officials how to pay for it. He said talks have gone well and he hopes to have a financing plan in place by the end of the year.

"I don't think it's pie in the sky," Harris said. "I think there are a number of options. Hopefully, we can sit down with the county and the city to finalize ideas."

Doc: The Madness is coming to U.S. Bank Arena? Yeah, right

County commissioners, who are needed to approve a county-wide tax or a vote on a tax, described those talks differently. Monzel said he last spoke to Nederlander in 2016, at which time the company offered no specifics.

Portune said he spoke to Harris Tuesday night and told him taxpayers won't build a new arena. He did offer a glimmer of hope for arena supporters, though, saying he is willing to discuss whether an arena combined with an expanded convention center could serve broader public interests and, possibly, justify an infusion of some public dollars.

But even then, Portune said, it would be a tough sell. The half-cent sales tax that generates tens of millions of dollars a year for the Reds' and Bengals' stadiums is not exactly popular.

Voters approved that tax 20 years ago, but Portune and others question whether they'd do so again. "There is still an incredibly strong public animus to funding sports stadiums," he said.

Another problem for a new U.S. Bank Arena is that it's not clear it primarily would be a sports arena. A major sports tenant usually plays in arenas of similar size, but a rebuilt U.S. Bank Arena would have only the Cincinnati Cyclones, a minor league hockey team.

The NBA already has thriving franchises in nearby Indianapolis and Cleveland, while the NHL has teams in Columbus and Nashville. The University of Cincinnati also rejected the idea of playing in a downtown arena, choosing instead to build a smaller, on-campus arena for its men's and women's basketball teams.

Harris acknowledged the challenge of finding another major tenant, but said the arena could survive without one. He said major concerts and events, such as political conventions, could bring hundreds of millions of dollars in economic activity to the region.

The Republican National Convention turned Cincinnati down last year after concluding U.S. Bank Arena wasn't up to snuff. The RNC chose Cleveland instead.

The other thorny question facing those searching for public dollars is where they'd find them. Cincinnati is staring down a $25 million budget deficit and Hamilton County is bracing for a big dip in sales tax revenue next year because of changes in what is eligible to be taxed.

A sales tax is the most direct route to raising money, but the county currently has a 7 percent sales tax and under state law only can add another 0.25 percent, which would leave county officials with no wiggle room. "That needs to be there for desperate emergencies," Monzel said.

Hotel taxes are another option. Both the city and county levy taxes on hotel rooms, which has more appeal to local taxpayers because visitors are picking up the tab. The risk is raising the tax so high it makes the city and county less competitive for the kind of events a new arena would like to host.

Guests in Cincinnati hotels already pay a tax of $17.75 on a $100 room, which tourism officials say is on the high end nationally.

Although the path forward is challenging, there is some consensus among city, county and tourism officials that a decision on the arena's future is needed sooner than later.

"We need to know where we're going," Portune said. "This U.S. Bank Arena thing has been dithered around for a long time."