Back in June, I discussed how Columbus and Franklin County taxpayers are doing on their public bailout of the Columbus Blue Jackets‘ arena, which is not well: Thanks to local casino taxes falling far short of projections, the arena is barely managing to pay its operating costs, meaning there’s no money left over to repay $10 million in debt to the state of Ohio and $44 million to former arena owners Nationwide Realty Investors. It turns out that may be good news for Columbus residents, though, since the terms of the deal are that if the casino money falls short, taxpayers can simply skip out on the debt:
The deal was structured so that casino tax revenue would be used to fund part of the arena management company operations, pay for capital expenses and repay the loans — in that order.
So far, casino taxes are generating only enough revenue to supplement management and operating costs at the arena.
The way the deal is constructed, Nationwide would assume the debt if there is not enough money to cover the arena purchase. The city and the county are not obligated to provide any other sources of revenue from their budgets to make up for the shortfall. That means their own budgets aren’t at risk, and without the prospect of an empty or dilapidated arena neither has an incentive now to reopen the deal.
“As far as I am concerned, Nationwide is carrying bad debt,” said City Auditor Hugh J. Dorrian. “ The contract will not be rewritten.”
This doesn’t make the bailout a good deal, mind you: The city and county are still sending $4 million a year in casino taxes to cover operating costs, plus have an estimated $2 million a year in deferred maintenance expenses that it has to pay off somehow. And defaulting on a $10 million loan from the state would just shift the burden from city taxpayers to state taxpayers in general, which isn’t really a net gain for the Ohio public.
That said, kudos to whoever on the Columbus side of things negotiated this “we’ll owe the private arena developers who we’re bailing out $44 million, unless we don’t have it in which case you’re out of luck, suckers” clause. At least it’s prevented a bad deal from going to worse.