Monday, April 13, 2009

Jones: Positively Cleveland faces likely cuts with Med Mart deal

I just talked to county commissioner Peter Lawson Jones, who confirmed that the county will "probably" tap into the hotel tax to pay for the Med Mart deal and likely cut the budget of Positively Cleveland, the convention and visitor's bureau.

"I’m assuming Positively Cleveland will have a role, though it’s going to be a reduced role, from what it currently has," Jones says.

The county may need a second source of funding for the Medical Mart and convention center besides the sales tax earmarked (indirectly) for the project. The county will pay MMPI about $45 to $48 million a year, while the sales tax will generate about $40 million annually or a little more. How will the county make up the difference? "The money of the hotel and bed tax will probably comprise some of that," Jones says.

That likely means budget cuts for Positively Cleveland, which relies on the hotel tax for most of its funding.

"I don’t see how [its budget] doesn’t get cut, because you now have another entity performing some of what Positively Cleveland does," Jones says. In other words, MMPI will book events at the new convention center, reducing the convention and visitor's bureau's role.

"But I believe there’s still a role for Positively Cleveland, and I believe my colleagues feel that way," Jones adds. "Trying to draw tourists to Cleveland is not exclusively conventions and conferences." He says MMPI and Positively Cleveland should sit down and figure out how they'll work together. Once the latter's reduced role has been defined, the county commissioners will figure out how much to reduce its budget, Jones says.

I will get a reaction from Positively Cleveland in the morning. I want to hear from them how much a budget cut would affect their efforts to bring visitors to Cleveland.

However, this may give Cleveland's professional promoters less to worry about: An awkward passage in Sunday's Plain Dealer article made it seem as if Nance thinks the county doesn't get a good return on its investment in Positively Cleveland. Not so, Nance says. He says he was only saying that Cleveland's attempts to book conventions in the current, antiquated convention center aren't paying off.

Also, Jamie Carracher, a spokesperson for MMPI, just e-mailed me about one of my posts from Saturday, in which I noted that MMPI VP Mark Falanga didn't talk about working with Positively Cleveland on convention bookings. "Mark didn’t intend to leave Positively Cleveland out during your discussion," the e-mail says. "MMPI definitely plans to collaborate with them going forward."

Finally, there's another possible option for filling the gap between the sales tax revenue and the payments to MMPI. Jones and Fred Nance, the county's negotiator on the Med Mart deal, note that the county is already collecting the sales tax money, and it'll probably have more than $80 million of it on hand by the time the project starts.

"That money will create a cushion that will be available to the county for the project," Nance told me this afternoon. "There could be multiple uses of it" -- including "paying what we call these additional base rent and supplemental rent obligations." (That's the money going to MMPI beyond the $36 million a year for construction.)

The longer it takes for construction to begin, the less the county will have to pay MMPI to run the facility, because the end date of the lease is set for Sept. 2027. So the county might use that money banked in advance to pay MMPI the extra few million required each year.

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