Saturday, December 08, 2001

County balks at Banks' financing plan

Garages funding raises issues

By Dan Klepal
The Cincinnati Enquirer

        Hamilton County officials have serious concerns about a proposed Port Authority financing plan that would allow construction of The Banks, a $600 million riverfront development to start next year.

        The plan was floated last week and calls for Firstar Bank to provide the county with loans in the event sales tax revenues don't cover payments on $60 million in parking garages that will lift the development out of the flood plain.

        A county analysis of that plan says it would have a number of adverse effects, including:

        • The county sacrifices management and control over its revenue and it precludes the county from issuing new debt.

        • Higher financing costs.

        • The port authority would determine terms and manage debt secured by the county.

        • Loss of the county's ability to pay for additional obligations from construction of Great American Ball Park, operations of the stadiums and early debt retirement of stadium bonds.

        County officials held a meeting with members of the port authority last week, and have a series of meetings planned next week.

        Both sides want to find a solution, but county officials say it will be difficult for them to commit to any plan that relies solely on sales tax receipts when the economy is struggling.

        “We're going into it with the idea that we're both going to look as hard as we can

        for common ground,” County Administrator Dave Krings said. “We'll probably find some, but it's too early to tell if it will be fully common ground.”

        The authority has narrowed its list of developers interested in building the development from 12 to three — Lincoln Property Co. of Bethel Park, Penn.; Madison Marquette of Cincinnati and Staubach Co. of Washington, D.C.

        Jack Rouse, chairman of the authority, said the development cannot proceed without securing financing for the garages. The Banks would include housing, office and retail space along with a 71-acre park.

        “There were two first ques tions out of every developer's mouth — has the parking been resolved and is the park included?” Mr. Rouse said.

        There is concern about the financing because slumping sales tax revenues have put the county in a financial hole.

        The county needs sales tax receipts to grow at an average of 3 percent a year during the next three decades just to pay for the two stadiums. The authority is suggesting the county can afford the garages if the sales tax receipts grow at an average of 4.8 percent each year.

        But sales tax revenues grew at less than 3 percent last year and have declined by 3 percent this year.

        Those two off years have had a devastating effect — sales tax receipts need to grow at 9 percent next year to make up the lost ground.

        “What continues to frustrate me is how unwilling our partners are to acknowledge the limitations created by cost overruns at Paul Brown Stadium, the lease obligations (with the Bengals) and the current economy,” Commissioner Todd Portune said.

        Tim Sharp, director of the Port Authority, said the proposal is a working document. He's confident the issues can be resolved and the development will move forward.

        “We're working through these issues with the county,” Mr. Sharp said. “There's always a way to get it to work.”


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