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QUICKEN LOANS ARENA PROPOSED ENHANCEMENTS

Extending the current admissions tax arrangement to fund $140 million enhancements to Quicken Loans Arena without new taxes, with a dollar today worth more than a dollar tomorrow.

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QUICKEN LOANS ARENA PROPOSED ENHANCEMENTS

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  1. QUICKEN LOANS ARENA PROPOSED ENHANCEMENTS

  2. CITY ADMISSION TAX ON ARENA “AS IS” • To assist the 1993 Gateway Arena Bonds, the City agreed to send annual % amounts of its City Arena Admission Taxes to the Bond Trustee from 1993 to 2023. • In 2015 the Trustee for Gateway Arena Bonds received $4.7 million in City Arena Admission Taxes, and the City retained $4.3 million from those taxes. • In 2016 the Trustee for Gateway Arena Bonds received $7.0 million in City Arena Admission Taxes, and the City retained $5.85 million from those taxes.

  3. CITY ADMISSION TAX PROPOSED FOR 2017 ARENA BONDS DEAL • Extends the current arrangement for another 11 years: from 2024 to 2034. • By extending the current admissions tax arrangement, we are causing the purchasers of tickets to events at the Q to contribute to the costs of the $140 million enhancements to the Q. • In other words, the City’s contribution to the Arena Bonds requires no new taxes: it simply extends the duration of an annual admissions tax payment that the City already makes to Cuyahoga County. • In exchange, the Arena lease will be extended to 2034.

  4. A DOLLAR TODAY IS WORTH MORE THAN A DOLLAR TOMORROW • One of the most fundamental concepts in finance is that money has a “time value.” That is to say that money in hand today is worth more than money that is expected to be received in the future. The reason is straightforward: A dollar that you receive today can be invested such that you will have more than a dollar at some future time. This leads to the saying that we often use to summarize the concept of time value: “A dollar today is worth more than a dollar tomorrow." - From TVMCalcs.Com • In the further slides examining the proposed public investments in the Arena Bonds, we are assuming a 5% discount rate to account for the time value of money.

  5. $70 MILLION PUBLIC BOND SOURCES County Sources (Sales Tax, Hotel, Other) 2016-2034 Destination Cleveland From 1.5% Bed Tax 2017-2034 City Admission Tax $4.5M/YR 2024-2034 PRESENT VALUE $26.4 M PRESENT VALUE $26.3M PRESENT VALUE $22.8 M TOTAL VALUE $75.5 M (INCLUDES RESERVE)

  6. COUNTY CONTRIBUTION

  7. CITY CONTRIBUTION

  8. DESTINATION CLEVELAND CONTRIBUTION

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