The complex deal to use casino-tax money to buy Nationwide Arena has hit a snag: theres not enough money to make loan payments.
Officials expected to pay off the loans with taxes from the new Columbus casino. But casino tax revenues are below projections.
The city and county have not made a single loan payment for the arena.
A Little History
To keep the Blue Jackets from leaving town, the Franklin County Convention Facilities Authority bought Nationwide Arena and gave the team free rent. The city-county authority financed the $52 million deal through loans from Nationwide and the State of Ohio in March 2012.
To make the payments, the city and county pledged to use a portion of casino tax revenue. But casino revenue is far below projections. And Franklin County Convention Facilities Authority Executive Director Bill Jennison said no payments have been made to pay off either loan.
More than $3 million remains unpaid. Jennison declined to be recorded for this story. But he said there's no money to make the loan payments.
Jennison added the casino tax money the authority receives goes toward arena operating expenses.
No Additional Taxes?
When the county-city run convention authority bought the arena, officials promised only casino taxes would be used to pay for it. Columbus City Auditor Hugh Dorrian maintains that promise.
"Let's say as long as I'm alive I will strenuously object to such an option," Dorrian said. "That is not an option under the current agreement."
Columbus casino revenue fell 42 percent below projections this year. When the deal was brokered, forecasters predicted casino tax revenue would grow two percent each year.
But Dorrian admitted it may be a long time before the Nationwide loan is paid off, likely not before its set maturity date of 2039. Dorrian said the worst-case scenario if the casino taxes don't cover the loans is the people who hold the loans, meaning Nationwide and the state of Ohio, would not be repaid, period.
Limited Liability
But because the convention facilities authority owes the money and not the city or county - Dorrian said there is limited liability.
"The payments from the authority will continue until such time as the loans are repaid," Dorrian said. "That may be a long time. But I want to emphasize they are not the liability of the city."
We reached out to both the state and Nationwide for comment about the lack of loan payments. A spokeswoman for the Ohio Department of Development said the state has forgiven $1 million of the loan because the arena met employment commitments. The state is getting its service fee on the loan.
Nationwide released a statement which said. "(It is) not in a position to speculate on future casino revenues or other theoretical scenarios."
Activist Speculation
For activist Jonathan Beard, it's a case of "I told you so." A long-time opponent of the arena deal, Beard said it is a drain on what should go toward public goods. Beard ran his own numbers and expects the city-county authority to be paying on the loan far beyond 2039 based on current casino-tax revenues returns.
"We showed a $1.8 billion deficit at the end of 100 years when we'd still be paying on the [arena]. So it's this huge albatross," Beard said. "It's just math. You put together a spreadsheet and your percentages and multiplier, and you work it out. We will never pay off the debt unless a whole lot more grandmas start taking their quarters to the casino and start gambling."