Wednesday, April 30, 2014

Close call on Jimmy Dimora's appeal, upheld 2-1

Two appeals court judges dismissed Jimmy Dimora as a cliched, corrupt crook today. But a dissenting judge cited Supreme Court decisions about money in politics to suggest Dimora should get a new trial.

Dimora, who charmed countless Democrats during his backslapping reign over Cleveland politics, left Judge Jeffrey Sutton less impressed.

The judge upheld Dimora's conviction while weaving in pithy summaries of Dimora's Vegas romp, hooker dalliances, backyard resort and cheesy affairs.

"Hotel rooms, a public official, sexual favors, help finding a government job: If there is anything to criticize here, it is not that the evidence fails to support the jury’s verdict; it is that the saga is so cliché," Sutton writes.

The big debate in Dimora's appeal is, Dimora wanted to introduce his state ethics disclosure forms as evidence. The trial judge said no. Was that an error that harmed his defense?

Sutton says no -- it was a harmless error.

"The government produced overwhelming evidence against Dimora," he says -- recorded phone calls, testimony from bribers and co-conspirators such as Frank Russo, and evidence about Dimora covering his tracks. "This case had it all," Sutton marvels. The ethics forms didn't prove that the listed gift-givers weren't bribing Dimora, he argues. Besides, Dimora didn't list all his "gifts," which shows he was trying to hide many things.

Judge Gilbert Merritt disagrees.  His peevish dissent seems as critical of the Supreme Court as it is of Dimora's trial judge.

"The influence of money in politics is growing by leaps and bounds, and the subjective intent of the public official receiving the money is perhaps the last and only distinguishing feature between criminal 'quid pro quo bribery' and permissible 'ingratiation,'" Merritt writes.

He cites two big Supreme Court cases about money in politics. The 1976 Buckley decision says buying votes attacks the foundation of democracy, but this year's McCutcheon decision says exchanging money for "ingratiation and access is not corruption," he notes.

The only way to navigate those two decisions, he says, is to look at the public official's intent, including his disclosures.

"The prosecutor promised the jury that she would show a culture of secrecy and nondisclosure shielding Dimora’s corruption," Merritt notes. The judge "said in open court before the jury that 'it’s very important to the government’s case to be able to indicate there wasn’t any disclosure' of Dimora’s political patronage."

This might not be the end of Dimora's legal battle. His lawyers can ask the entire federal appeals court, not just a three-judge panel, to review the case.

Merritt's dissent may be overly clever. Criminal law and campaign finance law aren't the same thing. Still, he has a point. Even as criminal law makes it easier and easier to prove that a gift became a bribe, the Supreme Court is allowing cozy financial relationships between donors and officials to escalate.

To read the full opinion, click here.

Monday, April 28, 2014

Sin tax extension would push public funding of stadiums past $1 billion

Two generations of Cleveland leaders have overspent on public stadiums, our columnist Michael D. Roberts argues in Cleveland Magazine’s May issue. “The vexing sin tax that we are being asked to extend for 20 years to support Cleveland’s professional sports facilities is the price of incompetence by public officials,” he writes. “Their lack of diligence and vision may cost the community more than $1 billion in the name of sport.”

Mike’s opinions are his own, but I helped him confirm the big numbers in his story. If Cuyahoga County voters extend the alcohol and cigarettes tax May 6, the public’s spending on Progressive Field, FirstEnergy Stadium and Quicken Loans Arena will jump past $1 billion.

One complaint I’ve seen in the sin tax debate is that good numbers on our public stadium spending are hard to find. So I’m publishing our numbers here.

But first, here is my stab at explaining the total costs of the sports facilities in five easy points:

• 1st and 2nd sin tax. The first sin tax, approved in May 1990, lasted 15 years and paid for much of the construction of Progressive Field and Quicken Loans Arena. The second sin tax, approved in November 1995, went into effect in mid-2005 and helped pay for FirstEnergy Stadium. It expires in mid-2015.

• 3rd sin tax. Issue 7, on the ballot May 6, would extend the sin tax again, from 2015 to 2035, to pay for renovations to all three facilities.

• Cost overruns. The construction of Progressive Field and Quicken Loans Arena in the 1990s went over budget and added up to more than the first sin tax could pay for. So Cuyahoga County borrowed money and spread the payments all the way to 2023. We’re still paying the construction debt.

• Other city taxes. Although county voters extended the sin tax in 1995 to help build the football stadium, Cleveland needed more sources of money for the project. So the city council raised three taxes: an 8 percent parking tax, a 2 percent hike in the entertainment admissions tax, and a $2 tax on car rentals. Those taxes have brought in about $243 million since 1995.

But they aren’t earmarked for the stadium -- they go into the general fund. So you can’t count them all as stadium spending. For about seven years (roughly 2006 to 2013), the sin tax covered the city’s payments on the stadium construction debt. Cash from the other three taxes was spent on other needs. Now that the sin tax isn’t earmarked for debt service anymore, the other taxes’ $15 million a year roughly cover the $13 million the city pays in stadium debt service.

• The cost of debt. Much like a mortgage on a $100,000 home will probably cost you more than $200,000 over 30 years, the interest on stadium and arena construction debt has added up over the decades.

Here’s what taxpayers have spent, or committed to spending, on construction and renovations at Progressive Field, Quicken Loans Arena and FirstEnergy Stadium, since 1990:

Sin Tax:

Sin tax 1990-2005, for Progressive Field and The Q:       $238 million

Sin tax 2005-2013, for FirstEnergy Stadium:                      $113 million
       ($87m for construction debt, $26m for repairs)

Sin tax 2014-mid 2015                                                     about $23 million
      ($3m for repairs, $20m to county)

Gateway cost overruns, not paid by sin tax:

Admissions tax from Q, hotel tax, etc. to pay off Gateway bonds:
        2002-2014:                                                                            $54 million
              ($62m, but $8m paid by leftover sin tax)
        2015-2023:                                                                            $37 million

(Total doesn’t include about $17 million more in reported ‘90s overruns; couldn’t acquire a public record on how they were paid)

County general fund $ to pay off Gateway bonds:
             1992-1999:                                                                         $47 million
             2000-2014:                                                                       $83 million
             2015-2023:                                                                        $39 million
                (-$20m in 2014-2015 sin tax, could help pay this)

FirstEnergy Stadium construction costs:

local taxes other than sin tax, for construction:                    $16 million

other public sources for construction:                                      $47 million
   city electric, water     $6 million
   RTA, sewer district   $5 million
   state                         $36 million

Construction debt service, 1997-2013:
   $75 million principal paid
   + $120 million interest paid
   = $195 million paid so far
   - $87 million sin tax paid to debt service
   = debt service paid with general fund*                                $108 million
         (*new taxes were raised to cover this)

Construction debt service still to pay, now until 2028:      $162 million

Total paid + debt obligations:                                         $947 million

Sin tax 2015-2035 if passed, for renovations:                   $260 million+

Total with sin tax extension:                                        $1,207 million

My sources are documents from Mayor Frank Jackson’s office and county executive Ed FitzGerald’s office. You can download the original documents by clicking these links: sin tax revenue, county debt service, Browns stadium presentation, city tax revenues (not all of this went to the stadium), cost of Browns stadium, city debt service.


Our calculation of $1.2 billion in public stadium costs if the sin tax passes -- not reported elsewhere in town -- will probably give the tax’s opponents a new argument. Enough! they’ll say.

“You would think that county officials, Mayor Frank Jackson and the Greater Cleveland Partnership would have a persuasive argument to ask the teams to renegotiate the leases and give the community some relief,” Roberts writes.

Supporters will likely argue that the public hasn’t had to pay much at all to renovate the publicly owned stadiums up to now. The city says it’s paid $10.5 million on football stadium capital projects, while Gateway says it’s paid zero in capital repairs costs so far.

The pro-sin tax side also says the three teams have generated much more than $1.2 billion in economic spinoff in the city, especially downtown. They could also respond to the big numbers with their argument that we should pay for renovations to “protect our investment.”

Friday, April 25, 2014

The Anointed One: Armond Budish steps closer to his coronation as county executive

Armond Budish thinks it’s no contest.

The former Ohio House speaker is so confident he’ll win the Democrats’ county executive primary May 6, he’s already scheduled a fundraiser for May 15.

He had $673,000 in the bank last week — about $669,000 more than his opponents Bob Reid and Shirley Smith — yet he’s hardly spent anything on advertising.

Budish, who got The Plain Dealer’s endorsement last week, has won the two biggest contests in the Cuyahoga County executive race, the money primary and the insider’s endorsement game -- before we even get a chance to vote.

How do you feel about that?

“The Anointed One,” my new profile of Budish, is the first in-depth look at the guy who seems destined to succeed Ed FitzGerald in Northeast Ohio’s most powerful political job. It examines Budish’s career, his motivations and ideas, his intense ambition, and his 16-month campaign for executive.

The story also looks at what Budish’s rise means for Cleveland politics, including my suspicion that his candidacy is ushering in a new era – the uncompetitive one, where the race goes to the swiftest, most moneyed Democrat, and the real choices get made before anyone hears from the voters.

The story is in the May issue of Cleveland Magazine, and it’s online now.

Wednesday, April 23, 2014

We don’t know how sin tax money will be spent

If the “sin tax” for stadiums passes May 6, who decides how much will go to the city of Cleveland, and how much to Gateway?

Who’ll decide what gets replaced first — the Quicken Loans Arena roof or the ramps at Progressive Field or the seats at FirstEnergy Stadium? Can any of it go to pay off construction debt, or will it all go to repairs and new scoreboards?

We don’t know. No one does. The city and Cuyahoga County still have to negotiate how they’ll share the alcohol and cigarette tax money. The negotiations won’t be easy. And they don’t intend to hash it out until after voters approve the tax.

“We do recognize that this is a gap in the legislation,” county councilman Dave Greenspan told me recently. “It is an issue we will need to deliberate on.”

The “sin tax” on alcohol and cigarettes is a county tax. So if voters extend it, the Cuyahoga County Council gets to decide how it’s spent. But city, county and business leaders say the extension is meant for repairs at all three publicly-owned sports facilities. (You can see the Indians' and Cavs' wish lists and a report about the Browns' stadium here.)

The city owns the football stadium, while the public Gateway corporation owns the baseball stadium and basketball arena. How will the money be divided?

“I think it will probably be even,” Mayor Frank Jackson said at the February press conference that kicked off the pro-sin tax campaign. Jackson wants the tax revenue, a projected $260 million over 20 years, to be split equally among baseball, football, and basketball.

But at a January meeting, Greenspan and three other Cuyahoga County council members warned Jackson’s chief of staff, Ken Silliman, not to expect an even split.

“A third, a third, a third is not something I am interested in,” Greenspan tells me. “I’m a big believer that the money follows the need. If in one year, Progressive Field has greater needs than the other two, that’s where money will go.”

The city and county haven’t had to share stadium money like this before. The first stadium sin tax, from 1990 to 2005, was earmarked for Gateway, to build Progressive Field and the Q. When the tax was renewed for 2005 to 2015, the first $116 million was earmarked for building and repairing FirstEnergy Stadium. (The last year or so of the tax will go to the county.)

But if the tax is extended to 2035, the city and county will have competing interests for the same pot of cash. The Jackson and FitzGerald administrations want to negotiate a cooperative agreement to figure out how to sort through those interests.

It’ll be tough. The Browns’ lease is more complex and vague about what the public has to pay for than the Indians’ and Cavs’ leases. The football stadium is newer and is used less often, but it’s bigger, and it’s battered by lakeshore winds. Gateway already has a system for weighing Progressive Field’s repair needs versus the Q’s. But that doesn’t help any with the football stadium -- unless Gateway were to take it over too.

The county will have the upper hand in negotiations with the city, because it levies the tax. But the cost of public stadium ownership is falling harder on the city right now. Cleveland is still paying off $13 million a year in construction debt on the football stadium, while the county is paying off $9 million a year in debt from the Q.

Could any sin tax money go to those old debts? City councilmen Brian Cummins and Mike Polensek have asked that question, and Jackson has entertained the possibility. But it seems unlikely. The county council sounds unwilling to hand over a straight third of the tax money to the city, and the county seems entirely focused on future repairs, not past debt.

Why wasn’t this all figured out before the tax went on the ballot? Greenspan asked that question at the January meeting.

“Those discussions need to happen, in my opinion, before the vote in May,” he said then, “so that the voters understand the complexity and understand the fundamental decision-making process as to how these funds are going to be used.”

He was ignored. Our elected officials would rather present a united front to get the tax passed, then argue about the messy details later.

Friday, April 11, 2014

Sin tax opponents propose $3.25 fee on all sports tickets; is pro-tax side getting scared?

The fight over the stadium sin tax just got more interesting.  After some uncertain steps, the opposition found its footing today. They proposed a simple alternative to the tax on alcohol and cigarettes -- a $3.25 facilities fee on every sports ticket.

"It takes the maintenance cost off the shoulders of those who can’t afford tickets or choose not to purchase them," says the No side's five-page, footnoted proposal, "and places it on those who actually use these venues, more than half of whom come from outside of Cuyahoga County."

At first, the opposition seemed like a pretty small group with a scattered message. But they are making headway.  The Yes side on Issue 7 has decided it can't ignore them anymore.  Are they getting scared?

The Keep Cleveland Strong campaign just sent out a press release saying a facility fee would "punish Cuyahoga County families and sports fans." It quotes three county council members and city council president Kevin Kelley. 

"These various ideas have been hatched and then publicly floated with apparently little thought, and none of them have stuck," says an especially disdainful county councilman Dan Brady. 

But this idea might stick -- at least as the counter-argument the town debates between now and May 6. 

Will Issue 7 be a jocks vs. nerds vote?  Fans surely don't want ticket prices to go higher. The Yes side notes it'll cost $13 more to take a family of four to a ball game. The average Clevelander may well prefer paying 7 cents on a six-pack of beer to that. Maybe the opposition has handed the sin tax side a winning argument.

But maybe not.  Warnings of higher ticket prices could rebound against the teams.  Our ticket prices may be low compared to other cities, but plenty of fans think they're gone up too much for frugal Cleveland.  Think of the anger against the Indians' dynamic pricing system, which raised the cost of cheap seats by much more than $3.25 in the last few years. 

Also, the No side cleverly notes that the Q already levels a $3 facility fee on concerts and all events other than games, and it doesn't seem to have hurt concert bookings.  

Last week, Brent Larkin wrote cryptically that the Yes side's latest poll "shows that the tax extension has a reasonably good chance of passing, although it’s far from a sure thing."  I think that means it's losing so far.  That could change, as the Yes campaign ramps up its message.  But it feels like the debate just realigned with 3 1/2 weeks to go.