The Cleveland Cavaliers announced this week a striking $140 million upgrade to the Q Arena that dramatically alters the facility's appearance and, the team says, would make the 22-year-old arena competitive by creating more space for dining, bars and public gathering.
The Cavs and taxpayers would split the cost, without any increase in taxes. Existing taxes on hotel rooms and Q tickets would pay most of the public's share.
The Q would remain open during construction, which would finish by 2020, under the plan.
Any discussion of public financing of sports stadiums is controversial in Cleveland, and the public will have multiple chances to offer thoughts on this project at various council hearings. The Cavs and government leaders believe they can make a strong case for this upgrade because of the Q's role as economic juggernaut for the region.
What is the project?
The $140 million project will reconstruct the Q arena to modernize it with a glass front, public gathering spaces and dining areas that let you watch the game while you eat. The Q is one of the oldest NBA arenas in the nation without a major update, and civic leaders fear that without a renovation, Cleveland will stop attracting top entertainment acts.
The Q will grow, stretching all the way to Huron Road, taking in the outdoor space from Ontario Street east to East 6th Street.
The reconstruction will increase space for dining and bars, fan zones and other gathering spaces by more than 60 percent, to 153,000 square feet.
The update will make the Q competitive with newer arenas in Pittsburgh, Detroit and Columbus.
Cuyahoga County will borrow the $140 million up front by selling bonds to investors. But like anyone borrowing money, interest adds up.
Paying off the loans will take until 2034 and cost approximately $244 million, including the interest. But the city and county want to set aside another $38.5 million for future sports stadium work, so the total cost of the financing deal will be about $282 million over the next 17 years, subject to market interest rates in the spring.
The Cavs will provide the biggest chunk of that, roughly $122 million, through increased rent payments for the Q.
Cleveland will provide more than $88 million, using its admissions tax on tickets to Q events from the years 2024 through 2034.
More than $44 million will come from the budget of Destination Cleveland, which will give up a piece of the county bed tax it receives now.
The county will provide $16 million, by dipping into the reserve fund it set up for the convention center and Hilton Cleveland Downtown, both of which are complete.
Nearly $9 million will come from admission taxes expected from future Cavs playoff games, otherwise payable to the county under an existing agreement with the city, related to the original Gateway bonds.
And a bit more than $3 million will come from expected increases in sales taxes on Cavs merchandise, food and alcohol sold at the Q, otherwise payable to the county.
The Cavs say they will pay for any over-budget construction costs and will cover the public's share if taxes are less than anticipated. The Cavs also say they will not add a user fee or any other ticket surcharge to cover their costs.