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Covelli Centre still a drain on Youngstown’s treasury



Published: Thu, September 13, 2012 @ 12:00 a.m.

With V&M Star ready to begin production in its new, state-of-the-art steel pipe-making plant on Route 422, and with the future of the U.S. Post Office in downtown Youngstown hanging in a balance, Mayor Charles Sammarone must face a harsh truth: Income tax revenue is going to decline, which means tough times ahead.

While the launching of the V&M facility is cause for celebration — the company is also building a $50 million pipe finishing mill — city government will feel the effects of the end of construction. That’s because the total number of employees at the plants will be lower than the total number of construction workers.

While the tax revenue numbers are still being crunched, Sammarone is already proceeding with cost-cutting measures in city government.

Since he took office in August 2011, the mayor has spent a lot of time analyzing the budget and has concluded that major changes must be made in the way the city operates. If the Post Office is closed, the city will lose $500,000 in income tax.

Hence, Sammarone’s plan to either sell or lease the Covelli Centre, which is a $900,000 drain on the public treasury each year. That figure represents the principle and interest on the $11.9 million Youngstown government borrowed to help pay for the $45 million sports and entertainment complex on the east side of downtown. The seven-year-old building — it was made possible by a $26 million federal grant secured by former Congressman James A. Traficant Jr. — does not generate enough revenue to cover the operation and maintenance costs and to pay the annual debt service.

While it is true that the Covelli Centre has been showing an operating surplus since 2009, there still isn’t enough money to pay the annual interest on the loan and reduce the principle. That means the city must dip into the already strained general fund.

The mayor, who has vast experience with city finances having served as a councilman, water commissioner and president of council, insists the current set up cannot be sustained. That’s why he wants to cut the Covelli Centre loose.

On Friday, the board of control, made up of the mayor and the finance and law directors, hired PA Sports and Entertainment of Downingtown, Pa., and Cranston, R.I., to review the center’s operation and evaluate the facilities. Sammarone says it is important to get an independent evaluation because he wants to know what to expect when he puts out a request for proposals.

Loan payoff

Given the mayor’s willingness to consider any offer that would enable the city to pay off its loan and perhaps have a little extra money to dedicate to the demolition program, the city should be able to find a buyer or a lessee.

Indeed, the consultant, PA Sports, has told Sammarone that while selling the $45 million complex may be a challenge, leasing it will be much easier. There could be national entertainment companies interested, and a local group of investors may emerge to put in a bid.

Regardless, Sammarone is unwavering in his contention that the city of Youngstown, which is losing population, has a stagnant tax base and must deal with an intractable crime problem with a reduced police force, cannot afford to indefinitely prop up the Covelli Centre.

As we argued from the outset, sports and entertainment complexes do not make money, which is why the private sector steers clear of them. It is mostly governments — with taxpayer dollars — that own the facilities.

The decision to build a $45 million complex was ill-advised, and now it’s time for the city to cut its losses if it can.


Comments

1johnyoung(241 comments)posted 2 years, 1 month ago

It is absolutely astonishing how the Vindicator editorial staff talks out of both sides of its mouth.

Editor Franko's June 5, 2011 blog entry entitled "Why mess with Covelli Success" proclaimed: "The operations within the city of Youngstown have few bright spots as they slug through some of the most economically depressed conditions an American city can muster. One is the economic turnaround at the Covelli Centre"; even going as far as labeling the facility as "...Profitable...". What were you smoking at that time, Toddie?

So which is it guys, is the Centre "a drain on Youngstown's Treasury" as you now have apparently awoken and finally noticed, or is it a profitable bright spot in an otherwise shabbily operated municipal government as you proclaimed a little over a year ago when old pal Jay Williams was trying to funnel a little extra concession business toward another good 'ol local boy Eric Ryan?

You guys are pittiful !

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2republicanRick(1168 comments)posted 2 years, 1 month ago

Youngstown owning and operating the Covelli is like a poor man owning a sports car. It's nice, but there are more important things that need addressed first.

The Covelli has been great for the area and is well run and well maintained. However, if the city can get someone else to run it and the city eliminate interest payments, they should jump at the opportunity.

Less be real here, in 10 to 15 years it will be the Covelli Casino.

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3georgejeanie(841 comments)posted 2 years, 1 month ago

Another government boondoggle , from the Feds giving the money to an inept local government to Mayor Jay giving sweetheart deals on the concessions. The taxpayer is stuck with the bill. Will you people ever get a two party system in the Mahoning Valley? It not could hurt, could it? By al l indications you are sliding further and further into the abyss.

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4redeye1(4563 comments)posted 2 years, 1 month ago

The D party lowering the tax rate to 2%, thank you for the laugh, The only way that will happen is when Hell freezes over and the devil ice skates .

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