CONVOCATION CENTER Inheriting debt angers candidates

YOUNGSTOWN -- Most of the candidates running for Youngstown mayor aren't too thrilled with the prospect of inheriting a long-term debt -- as high as $12.1 million -- to make up a funding gap for the city's convocation center.
The announcement of the $12.1 million figure shocked and angered several candidates running in the November election for mayor.
"The next mayor will inherit a mess," said Maggy Lorenzi, one of four independent candidates running. "Projects like this have cost overruns, but it's inexcusable for the city to have to borrow $12 million. The arena will be a major burden."
State Sen. Robert F. Hagan, the Democratic mayoral nominee, said the current administration will force taxpayers for the next 20 years to pay for the convocation center, slated to open Nov. 4.
"I'll try to handle this when I'm mayor, but they're throwing up a lot of road blocks and putting us deeper and deeper into debt," Hagan said. "This is a city already on the brink of red ink. The city will be strapped for years with a financial boondoggle."
Hagan said he wouldn't hesitate to close the arena if it became a significant financial drain on the city.
"If it gets out of hand, shutting it down and selling it is an option," he said. "If I'm strapped with a white elephant and throwing good money after bad, I'd shut it down."
Jay Williams, who quit his job in April as the city's Community Development Agency director to run as an independent candidate for mayor, alluded to a similar scenario. But Williams wouldn't directly say he'd close the arena if it became a financial problem.
"I'm not going to allow the existence of that facility to drain the city of its financial resources," he said. "I won't allow the arena to stop me from my first priority, which is to make our citizens safe and for them to have a good quality of life."
While working for the city, Williams administered the $26.8 million federal grant Youngstown received for the convocation center. He is confident he can handle the arena's finances if elected mayor.
"I have a distinct advantage over the other candidates because of my experience with the city and finances," Williams said.
Bozanich's scenario
City Finance Director David Bozanich said last week that the city may have to borrow as much as $12.1 million in a "worst-case scenario" to pay for the arena.
In that scenario, Bozanich pegs the cost of the arena at $45.38 million, assuming an interest rate on a 20-year bond for the $12.1 million at 7 percent. But Bozanich anticipates the city won't have to borrow that amount and the interest rate will be somewhere in the mid- to upper-5 percent range.
Also, Bozanich said the arena's profit for the first year would be $1,153,802, saying that figure is a conservative estimate. The city would use $852,353 of it to pay its debt in the first year under Bozanich's estimate.
Joe Louis Teague, another independent candidate, said city officials let the cost of the facility spiral out of control.
"The city's going to be paying for this when I'm dead and pushing up tulips," he said. "We're going to get deeper and deeper in debt."
Robert Korchnak, the Republican nominee, said he is surprised at the $12.1 million figure.
"I'm very concerned about it," he said.
Situation with arena football
Several of the mayoral candidates said it was a mistake for the city to not permit an af2 (Arena Football League 2) franchise to be a tenant of the facility during the first year of operations.
Mayor George M. McKelvey said that is being done to allow the Youngstown SteelHounds minor league hockey team, the arena's main tenant, a year to grow its fan base. McKelvey also said he's confident af2 will be at the arena next year.
Brendan Gilmartin, running as an independent, said it isn't unusual for projects of this size to have cost overruns.
"But someone dropped the ball and it will be something the taxpayers will be up against for years," he said.
McKelvey said he is lobbying federal government officials to provide the money needed by the city to close the funding gap.
McKelvey refused to identify the officials saying if he did, Bertram DeSouza, a Vindicator columnist, would lobby those people to not fund the project.
Officials with Ohio's two U.S. senators -- George Voinovich and Mike DeWine -- said neither McKelvey nor any Youngstown official has called their offices inquiring about federal funding for the arena. McKelvey was one of the nation's most prominent Democrats to support President Bush's re-election effort last year.

Don't Miss a Story

Sign up for our newsletter to receive daily news directly in your inbox.