CHICAGO - The Cleveland Indians will stay in their current stadium through at least 2023 under a new agreement that comes as officials make final payments on the 18-year-old tax-exempt debt issued to finance construction of the downtown stadium.
Under the current stadium agreement, the city of Cleveland gets automatic ownership of Progressive Field once the tax-exempt bonds are retired. This week, the City Council approved a measure that will hand ownership immediately back to the stadium's current owner and original developer, Gateway Economic DevelopmentCorp. That move allowed Gateway and the Indians to renegotiate the team's lease, extending it another 10 years through 2023. The Indians reportedly wanted a longer lease to allow them to generate long-term revenues and corporate sponsorships.
The lease extension comes as the Indians prepare to make their last $600,000 payment on a $31 million piece of tax-exempt debt originally issued in 1990 to finance part of the ballpark's construction. Another $116 million in tax-exempt debt was paid off in 2005, according to Tim Offtermatt, managing director at Wachovia Securities LLC, the financial adviser on the stadium deal. The Indians will continue to make payments on another $10 million in taxable debt.
The payments are made with revenues generated from luxury box and club seat tickets, Offtermatt said. Most of the $116 million in tax-exempt debt was paid off with revenues from a county-wide tax on liquor and cigarette sales in Cuyahoga County.
When Gateway originally issued the debt in 1990, most of it qualified as tax-exempt under the tax rules then in place. Since then, the transition rules under the Tax Reform Act of 1986 expired, and when Gateway returned to the market in 2004 to refund some of the debt, it was required to sell mostly taxable debt, said Offtermatt.
The sports complex includes the baseball stadium as well as a basketball arena where the Cleveland Cavaliers play.