Wednesday, January 19, 2000

Reds 'ballpark figure' just that


Interest left out of number given public

BY DAN KLEPAL
The Cincinnati Enquirer

        It's the bottom line on a loan agreement that every homeowner needs to pay attention to — the one adding the interest to the principal for the total amount of money paid during the lifetime of a loan.

        It's the same for taxpayers.

        The county will issue more than $243.5 million in bonds this summer so it has the cash on hand to build the Reds a new home, according to financial statements obtained by the En quirer.

        Originally, the county planned on issuing only $218 million in bonds, but that was before the cost of the stadium shot up $45 million because of inflation.

        The effect of having to issue more bonds over a potential 32-year lifetime of the loan could add about $160 million to the taxpayers' bill.

        That difference — from $564.6 million to $726.2 million, when interest is figured in — is Tim Ricci's best guess.

        Mr. Ricci works for Public Financial Management in Cleveland and is the county's financial adviser. He said the bonds could be retired earlier than 32 years if the economy grows at a rate greater than 3 percent.

        If the economy does not grow fatter than predicted, the bonds will stay on the books for the full term, he said.

        “We haven't run any bond schedules in the 20-year range, but we build into the structure the ability to pay them off sooner,” he said.

        Commissioners are expected to sign a Reds lease amendment today that sets the maximum county contribution to the stadium at $280 million.

        It's an act that also will cement the amount of bonds needed to build the ballpark.

        Hamilton County Commissioner Bob Bedinghaus, who championed the sales tax increase in 1996, said Tuesday that taxpayers should have known all along that interest would figure into the bottom line.

        Mr. Bedinghaus said it's like building a new home. A couple might borrow $100,000 to buy a home. But after paying 81/2-percent interest over 30 years, that home would really cost them $276,000.

        “From the beginning, we've always said debt would be issued,” Mr. Bedinghaus said. “When you go buy a $100,000 house and (someone) asks you how much it costs, you say $100,000.

        “You don't say it cost $300,000.”

        Maybe not, but Tim Mara still thinks taxpayers have been hoodwinked.

        Mr. Mara, who led the campaign against the sales tax hike, said commissioners promised to retire the sales tax increase within 20 years, and maybe sooner.

        He said decisions made since 1996 — such as moving the football stadium several blocks to the west and building the Bengals three practice fields on prime riverfront real estate — have added significant cost to the projects.

        “This is all the result of very bad planning,” Mr. Mara said.

        When the Reds' ballpark and interest is added to the two series of bonds already on the books for Paul Brown Stadium, the bottom line comes to $1.425 billion.

        Still, Mr. Ricci plans to deliver one basic message to commissioners today: The county can afford all of it.

        Mr. Ricci said the county's economy has grown at a 5-percent clip for the past few years. That makes the county's estimated economic growth conservative.

        Hamilton County Administrator David Krings said the county will meet all of its obligations, including paying off the stadium debt, giving property owners an $18 million tax break, giving Cincinnati Public Schools $5 million, and doling out about $1 million to each team.

        “There is adequate money,” Mr. Krings said.

       



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