Mayor Jamael Tito Brown has called the $88.6 million in federal COVID-19 stimulus funds a "legacy opportunity" for Youngstown.
He's right, and he's right to ask folks to come forward with their ideas for how to best spend the funds.
Pay off the Covelli Centre.
Now, the city has myriad infrastructure needs ranging from broken roads to missing sidewalks to hundreds of dilapidated homes that need to be demolished. It has capital needs from snowplows to basic infrastructure like streetlights. Then there's the issue of the $4.4 million the state auditor says the city must repay to its general fund from money taken from water and sewer accounts for items like economic development and the mayor's SUV.
So, my idea might seem out of left field, but indulge me for the moment.
In the past, such federal largesse like the $88.6 million would have come into city hall through the front door with much of it exiting soon after by murky means involving insider deals and tales of cash-filled envelopes. This might be a different era, but scrutiny is still required. And the easiest, most obvious uses of all of that money might not be the best.
Sidewalks, snowplows and even the repayment of the general fund are all short-term improvements that either engender more spending (sidewalks and snowplows will eventually need to be repaired or replaced) or, while important, are dead ends in terms of a return on investment.
Maybe you feel the city should hire more workers. Well, you also take on long-term obligations that can quickly devour any budget. A worker hired at $25.91 per hour will cost on average an additional $11.82 per hour in benefits. At a cumulative $37.73 per hour, that one worker will cost an employer about $400,000 by year No. 5.
And we should have fresh concerns about hiring and raises. Remember the case of Clerk of Court Sarah Brown-Clark? When many departments in city hall downsized during the pandemic and other city employees took on more responsibilities without a pay increase in the past year, Brown-Clark handed out raises to 11 employees totaling almost $100,000. In five years, that becomes $500,000 in spending that might not have been prudent. See how quickly that adds up?
So while there are many, many needs out there that deserve attention — and this is not to discount many of them — I am focused on something the city could spend money on that would quickly provide other opportunities. That's what paying off the Covelli Centre might mean.
The city took on more debt to fund the $42 million center, which started with a $26 million HUD grant for a "convocation center." Today, the city pays about $1 million per year in debt service, and about $5 million will be left after this year's payment is made in May.
To be clear, no longer is the center a strain on the general fund. That money comes from concession profits and a ticket tax — which totaled about $700,000 in the last normal year of 2019 — and funds from Mahoning County real estate taxes that are earmarked solely for debt payoff.
As City Finance Director Kyle Miasek notes, the city has had a low debt load over the years, so this has been a good use of county funds, especially once JAC Management President Eric Ryan was hired to run the center, right-size the operation and make it more self-sufficient almost a decade ago.
Now, we've obviously hit a bump over the past year with the pandemic and the center's ability to have major events. But looking forward to normal times in the near future, imagine this scenario if you paid off the Covelli.
Since that $700,000 won't be needed to pay off debt, the council could enact an ordinance that would allow those funds to flow back to the general fund. At $700,000 a year, that's a seven-year payback on the stimulus funding. If the council doesn't want to make that change, the city could also establish an enterprise-zone of sorts downtown to create a revolving fund for investment in downtown businesses.
In addition, at 16 years old, the center is not getting any younger. This fund could also protect the city from big-ticket items down the line, like a new roof, etc.
And then, without the need for the Covelli Centre bond payments, the city could enact different debt to create more opportunities. Other revolving funds. Other neighborhood solutions. Other business initiatives.
And I know I'll get at least one reaction that goes like this: "Why should a poor city use $5 million of the funds to fund a center many people will never see the inside of?"
Well, first, the idea is to pay it off and use debt and funds elsewhere that WILL impact more people. But also, consider this: The city-owned center is managed by a company that is contracted by the city to make a profit. So, more diverse entertainment options often take a backseat to more proven acts. What if the city allowed the center to create a fund to underwrite an event featuring little- or no-cost tickets? How could that benefit everyone in the city?
After a year-plus of being locked down, we'd all like a fresh start. We'd like some entertainment options. We'd like a new push downtown. Paying off the Covelli might be a good first step.
I don't have the expertise of Miasek or Ryan, and I'm sure there are holes in my theory to iron out. But that's my idea. Agree? Disagree? Have your own good ideas? Hit me up with your views at email@example.com.
— Mark Sweetwood is local editor of Mahoning Matters.