Looking to bring in additional revenue to the city and provide a capital improvement fund for some of Youngstown’s largest entertainment and sports venues, Mayor Charles Sammarone considered expanding a 5.5 percent admission tax charged only on the Covelli Centre.
Based on the recommendation of a three-member panel — city Finance Director David Bozanich, Deputy Law Director Anthony Donofrio, and Eric Ryan, Covelli’s executive director — Sammarone decided not to expand the tax.
Smaller venues, such as the Youngs-town Playhouse and the Oakland Center for the Arts, were ruled out, the mayor said, because taxing them wouldn’t raise much revenue and it would “put a burden on them.”
Also ruled out were events at schools, churches and nonprofit organizations, he said.
That left Youngs-town State University, the DeYor Performing Arts Center and Stambaugh Auditorium as the only possible venues for the fee.
But state law doesn’t permit the city to impose an admission tax on YSU tickets, Donofrio said.
“The key was the university for football and basketball,” Sammarone said.
“While we provide services to [DeYor and Stambaugh] such as snow removal and police and fire, it’s not fair to do it to just two places,” he said.
Sammarone said he never approached officials from either DeYor or Stambaugh with his proposal, which would have set aside 25 percent to 40 percent of the fees collected for capital improvements at those two locations.
But if the city was going to pursue an expansion of the tax, the mayor said he would have spoken with officials from both facilities about the pros and cons of the fee.
“Venues like [DeYor] and Stambaugh are struggling to begin with, and this would discourage some acts from going to those venues,” Donofrio said.
Donofrio acknowledged that if DeYor or Stambaugh wanted money for capital improvements, they can impose their own fees and keep all the proceeds.
The three-member panel estimated an admission tax at YSU, DeYor and Stambaugh would have generated about $200,000 annually in admission taxes. Without YSU, that annual figure would drop to between $75,000 and $125,000, Donofrio said.
The city administration looked into expanding the admission tax as a follow-up to the $250,000 Youngstown Plan, a study conducted about a year ago by the PFM Group that examined ways for the city’s government to operate more efficiently and generate more revenue.
The study recommended the city consider leasing or selling the Youngstown-owned Covelli Centre.
At the time of the study, released in September 2012, the center was causing a financial drain on the city. But it ended 2012 with a $67,261.09 profit, and Ryan expects a profit for 2013.
The city set strict provisions in place for a sale, $15 million; or a lease, a five-year deal with payments of $700,000 a year up front for the first two years in advance.
Also, the city would continue to keep the admission tax under a sale or lease.
There were no takers on either by the April deadline.
“PFM recommended ways to try to correct problems with finances at Covelli,” Sammarone said. “First, it was a lease or sale. If not, then it was expanding the tax. We looked at all of those options.”
The three-member panel looked at cities of similar size to see the success of admission taxes elsewhere.
Most either didn’t have a tax or imposed smaller percentages. Overall, there are 66 municipalities that have admission taxes.
Admission taxes of 5 percent generated $41,412 for Euclid and $49,353 for Parma — both communities are in Cuyahoga County — in 2010, the most-recent year for that tax information compiled by the Ohio Department of Taxation.
Youngstown originally imposed a 9.5 percent admission fee at the center in October 2007 — the highest percentage of any community in Ohio at the time — and dropped it to 5.5 percent in August 2008.
The admission tax at Covelli is different than other locations, Donofrio said, because the center is owned by Youngstown, and the tax is used to help offset the $11.9 million the city borrowed in 2005 to pay its portion of constructing the $45 million facility.