Cleveland's Financial Lessons
Aired October 2, 2003

Businesses plans for a new convention center floundered this year. Backers of the project failed to convince civic leaders and the public it was the right time and right plan for the region. The price tag had many thinking back to the area’s last big project, Cleveland Browns Stadium, where cost overruns and questions about the return on the investment still linger. ideastream’s Mike West takes a look back at the outcome of other expensive efforts to bring financial life to the region.

  

Northeast Ohioans love a good game, and they’ve shelled out millions for their sports facilities. Taxpayers were promised their dollars would bring crowds and prosperity to downtown Cleveland. But hundreds of millions dollars later, at least one city leader questions the game plan.

Mike Polensek: I think the one that most probably symbolizes the greatest mistake is the Cleveland Browns Stadium. To be built on prime lakefront land for 8 to 10 events a year and to realize for the majority of days it sits there empty, no concerts no other venues, no other events were told that it’s too costly to operate for those other venues.

Mike Polensek has been on the Cleveland City Council since 1977 and has spent countless public dollars. He expected better results from the Browns football stadium, as well as Gateway, which includes Jacobs Field and Gund Arena, which were also built with tax dollars.

Mike Polensek: We were also told the 28,000 jobs were going to be created as the result of that public investment. And we know now that if it was 2,800 jobs created during the course of construction and thereafter we’re probably lucky.

The city councilman admits sports has done some good, but looking back, he would have rather spent the money on improving neighborhoods in an effort to keep residents from moving away.

Gateway also has its defenders. Joe Marinucci is the executive vice president of the Downtown Cleveland Partnership. He also spent 5 years serving and leading the Gateway Board of Directors.

Joe Marinucci: Sometimes we lose the perspective of time. If you think back, how many communities have in their recent history had the opportunity to host the Major League All-Star Game and the NBA All-Star Game in the same year calendar year. Those are the types of things that unfortunately people lose perspective of as time moves on.

Other taxpayer built projects also have come under fire, like the RTA Waterfront Line, airport expansion and the Rock and Roll Hall of Fame and Museum. Marinucci thinks they get more knocks than they deserve.

Joe Marinucci: The Rock and Roll Hall of Fame, some people would question whether or not the projections were appropriate, or the expectations were appropriate. But the reality is that facility is visited by everybody who visits Cleveland, whether it’s the first or second time. The science museum, another great example at the lakefront of a significant investment on our part that year in and year out is drawing hundreds of thousands of people to the lakefront.

On the other side of downtown, Playhouse Square has fared well as a public investment. That’s the opinion of its president, Art Falco. Rebuilding the theater district started with $22 million tax dollars, the rest was raised privately. Falco says Playhouse Square has directly and indirectly helped create a luxury hotel, jobs and the rehabilitation of historic buildings.

Art Falco: So, for an initial $55 million investment, were returning over 175% a year. In addition to that, despite the fact that we’re a non-profit organization we still pay taxes. We pay taxes in payroll, real estate activity, admission taxes when we rent the theater and that amounts to over $4 million a year. So it really has been quite a community success story.

Ned Hill: Except what we found out is visitors in Cleveland are like little laser beams. They go home from work, have their dinner at home, and then come in for the event.

Cleveland State University Economist Ned Hill. He says it’s been a challenge to convince downtown visitors to hang around and spend money. Hill also says if planners would have been more honest in the past, maybe taxpayers would be more receptive to spending their money on things like a convention center now. He thinks it’s worth keeping in mind in the future.

Ned Hill: A much better job has to be done in selling the benefits or documenting the benefits. And I also think reasonable tempered cases have to be made rather than overselling these projects. The marketing can get in the way and if you lose credibility it’s going to hurt your ability to do things as you move forward.

In Cleveland, Mike West, 90.3.