Monday, October 13, 2008

Financial Subsidies For Arrowhead And Civic Center Burden City

Prepared Comments Made to
October 13, 2008

At last Monday night’s Committee of the Whole, Mayor Held commented at the end of the meeting on the lone bid to lease Arrowhead Golf Course that was presented by Finance Chairman Jon Snyder. Those comments appeared in an October 8, 2008, Beacon Journal article titled “North Canton council discusses golf proposal.” In the article, “Mayor David Held said the city’s goal has always been to preserve the course as a community asset and not spend money in the process.”

The reality is that the City of North Canton has spent money and lots of it to subsidize the debt service on the bonds used to finance the original purchase of the property. Quite frankly, it would be refreshing if the city would come clean and tell the taxpayers of North Canton the truth regarding the revenue shortage from the lease of the golf course and the funds being removed from the general fund to subsidize the debt service.

The truth is that the city has made four bond payments of $300,000 each in four of the five years it has owned the property. The bond payments total $1,200,000. Interest expense on the bonds over the five years the city has carried the debt on the property has totaled $289,922. The bond and interest payments paid by the city over the last five years total $1,489,922. Revenue from lease payments over this same period has totaled $568,500. As a result, the city’s ownership of Arrowhead in the five years it has owned the property has required a subsidy from the city’s general fund of $921,422.

Under the lone bid to lease Arrowhead for a second time, the city will receive $150,000 annually. Under this new lease, the city will now have to pay the property taxes which are nearly $50,000 annually. Under the new lease, the city will net approximately $100,000 a year after property taxes are paid. Under the new lease, the city will receive approximately $95,500 less in annual lease payments than under the previous lease with Mr. Larizza.

In the same Beacon article noted above, Mayor Held states, “Considering the economic circumstances over the past five years, I think we have come out pretty well.” Mayor Held, I believe taxpayers of the city would beg to differ with you on that point!

The debt service for Arrowhead will continue to require financial subsidies out of the city’s general fund to the tune of at least a quarter million dollars a year for three more years. After the last bond payment for Arrowhead is paid in 2011, North Canton taxpayers can look forward to infrastructure repairs that will require yet more subsidies.

Why not acknowledge that the city is subsidizing debt service for Arrowhead?

In spite of the fact that the Repository strongly encouraged North Canton’s purchase of Arrowhead property five years ago, it would be nice if the Repository would inform its readers that North Canton tax dollars are subsidizing debt service on the purchase of Arrowhead while the city faces budget deficits.

I am sure Repository readers will forgive the Repository for urging North Canton’s purchase of Arrowhead in spite of the financial burden it has placed on the city.

The North Canton Civic Center is another financial burden requiring subsidies by taxpayers. Last year, expenses for the Civic Center outpaced revenues by $100,136. From 2001 through September of this year, North Canton taxpayers have had to subsidize operations at the Civic Center to the tune of $650,604.

The subsidies for the Civic Center for the last eight years and the subsidies for debt service at Arrowhead over the last five years combined total $1,572,026. Mayor Held, President Revoldt, Finance Chairman Snyder, I am sure you would agree these economic circumstances are not good whether the city faces budget deficits or not.

Why is council acknowledging the financial subsidies required to support the Civic Center but not acknowledging the financial subsidies required to support Arrowhead?

It was reported in council last week that only twenty-seven residents booked events at the Civic Center last year. This represents 13 percent of the total events booked for 2007.

Why are North Canton taxpayers subsidizing a facility that is used predominantly by non-residents which results in a financial loss for city residents?

A brief history of the Civic Center, framed on the wall at the Civic Center states “…this property was acquired through civic donations and presented to the city to provide the citizens of North Canton Community with a facility to socialize, conduct business and expand the arts.” This leads to the following question.

Why aren’t there discounted rates at the North Canton Civic Center for citizens of North Canton?

Can the city return the use of the Civic Center to North Canton citizens as was originally intended and still reduce the subsidies required to operate the center? I hope that can be accomplished.

These are decisions that should have been addressed years ago.

Mayor Held, I believe the city could have fared much better as you claimed in your statement if these subsidies and deficits had been managed in a timely manner.

If there had been responsible financial management in the city regarding spending, one would be able to accurately say the city has fared pretty well as you stated in your comments to the press. Unfortunately, that has not been the case for North Canton.

Thank you,
Chuck Osborne
City of North Canton