Cleveland Cavaliers

How Cuyahoga County can afford to give millions to the Q, plus 9 other priorities

CLEVELAND, Ohio – Cuyahoga County taxpayers paid to build the Q. But the county — which has borrowed big bucks to build a convention center and hotel and is considering how to overhaul the decaying Justice Center — can’t afford to foot the whole bill to upgrade it.

So County Executive Armond Budish worked with the Cleveland Cavaliers, Cleveland Mayor Frank Jackson and the board of Destination Cleveland to come up with a plan to finance $140 million in renovations without adding new taxes.

“This was truly a collaborative project,” Budish said in a meeting with cleveland.com editors and reporters. “It’s important because we were dealing with a core community asset, which is why everyone has taken such a great interest.”

Cuyahoga County Council, along with Cleveland City Council, the Gateway Economic Development Corp. and the board of Destination Cleveland all get a say in the agreement. Council will hold public meetings to discuss the finances.

“It was a long and sometimes difficult process regarding if and how the public sector could make its contribution and remain fiscally responsible, Budish said.

The county currently has $1 billion in outstanding debt, which affects the short- and long-term ability to provide support and services to its citizens, according to a report. The debt service represents 5 percent of the total budget. That includes tens of millions of dollars the county still owes on the arena and baseball stadium, which the county borrowed $120 million to build in 1992 and 1994.

Cuyahoga County hindered by $1 billion in debt, report says

The county, though, has figured out designated revenue streams to pay for its share of the renovations.

  • The county will provide $16 million, by dipping into the reserve fund it set up for the convention center and Hilton Cleveland Downtown, both of which are complete.
  • Nearly $9 million will come from admission taxes expected from future Cavs playoff games, otherwise payable to the county under an existing agreement with the city, related to the original Gateway bonds.
  • And a bit more than $3 million will come from expected increases in sales taxes on Cavs merchandise, food and alcohol sold at the Q, otherwise payable to the county.

All these pots of money are separate from the county’s tight general fund.

The county still faces several large-ticket funding priorities for the future. Here’s a look.

1. Upgrade or replace the Justice Center

The county is expected to receive a report on replacing or renovating the 40-year-old Justice Center in early 2017.

Cleveland owns the land under the jail, and the county owns the land under the justice tower, at St. Clair and Lakeside avenues.

The county owns the Justice Center and jails. Cleveland owns the police headquarters.

In December 2015 the county agreed to pay to pay $50,000 to K2M to study options for the Justice Center. 

Judges provide vision of new Justice Center

2. Provide more downtown parking

The county is considering building a parking deck for 400 vehicles on a surface lot it owns by Courthouse Square on Lakeside Avenue. The cost is not known.

Already the county is spending $20 million to repair and upgrade the Huntington Park Garage.

It had to set aside 400 spaces in the garage for the downtown Hilton Cleveland Hotel, Huntington Convention Center and Global Center for Health Innovation.

3. Cover potential future health benefits overruns

In September the county froze its regional health insurance program after discovering a $9.5 million budget shortfall — plus the depletion of a $12 million health care reserve fund. 

The problems are in the employee benefits as well as in a regional program, in which municipal governments and other public agencies take advantage of the county’s buying power to get low rates.

The county plans to cover the shortfall with rainy day funds — tax dollars the county has saved. The county is also overhauling the program to keep it solvent in the future.

4. Reduce blighted properties

County council and officials have committed to demolish abandoned and blighted properties. The county announced in 2015 it will spend $26 million — $8 million over each of the next three years, along with $1 million each year for two years from the Cuyahoga County Prosecutor’s Office, to demolish problem properties.

5. Repair roads and bridges

The county asked cities in 2014 to submit a prioritized list of road repair projects and said it would pay for them. Forty-four cities submitted 135 projects totaling $120 million. The county in 2015 said it did not have the money for those projects.

Road projects that could have qualified for up to $20 million in federal funds were not submitted for approval through the Northeast Ohio Areawide Coordinating Agency because the county did not want to wait the several years needed for approval, Budish said in 2015.

The county has been paying for road and bridge projects, but much more needs to be done, officials said.

6. Support pre-kindergarten programs

The county made a $10 million investment in 2016 to expand the availability of high-quality pre-kindergarten education. The county wants to work with community groups to create a $75 million fund to ensure all children have a pre-K education.

The county has raised $12 million from private and philanthropic donors.

7. Expand workforce programs

The 2015 budget included $3 million for each of the next two years to leverage with local and state workforce programs to help people find their first job and to continue to assist them so they can eventually have a sustainable income and climb out of poverty.

8. Reduce infant mortality

The county has joined the city in an effort to reduce infant mortality. It committed to spend $500,000 in 2016 and $1 million in 2017 for programs that keep babies alive past their first birthday

9. Transforming MetroHealth System

The MetroHealth System last year accepted a $7.6 million budget cut from the county in exchange for support of up to $1 billion for campus transformation.The hospital system instead now plans to borrow money itself for an $855 million building campaign. But it is open to county help.

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