Daily Times

This year’s Republican National Convention will be an all-you-can-eat irony buffet. In two weeks a putatively free-market-loving party seems set to nominate a protectionist candidate and former Democrat for president. An extra twist is where many delegates, party leaders and journalists will stay: a glimmering, new $276 million convention-center hotel owned and financed entirely by taxpayers.

The 32-story Hilton Cleveland Downtown, which opened June 1, boasts 600 rooms and 50,000 square feet of meeting space. A quick walk from the GOP’s main stage at Quicken Loans Arena, where LeBron and his championship Cavaliers play, the hotel is a grand, glass-faced skyscraper overlooking Lake Erie and the Rock and Roll Hall of Fame.

Yet despite its name, the Hilton hotel company doesn’t own the Hilton Cleveland Downtown. Instead, the hotelier is hired help, employed for its brand name and expertise. The true owner is Cuyahoga County, via a lease-purchase agreement with the Cleveland-Cuyahoga County Port Authority. Taxpayers are 100% responsible for its $276 million cost and the financial risk attached to its general-obligation debt.

When Cleveland bid in 2014 for the Republican and Democratic conventions, taxpayers had already financed a mammoth expansion of the city’s convention center. But an attached hotel was urgently needed to close the deal, and helped elevate Cleveland over Dallas, the other finalist. After touring Cleveland for a final time in 2014, Republican Party Chairman Reince Priebus praised the city’s “hunger, commitment and just the willingness to do whatever it takes to make this work.”

The county built the hotel because private firms weren’t interested. “Private developers,” the Plain Dealer reported, “expressed little interest in building anything but parking on the project site.”

Rejected in the marketplace, county officials recast the hotel proposal as a reflection of government’s “entrepreneurial spirit”-as the county’s top executive put it at the groundbreaking. In the old days, this might have been called socialism or a public-works project. Today, it’s called economic development.

Many cities subsidize convention centers, even attached hotels. But few places have been as systematic about a government-driven economy as Cleveland and Cuyahoga County. Seemingly every major building, business and institution in northern Ohio receives political favors-tax abatements, sales-tax forgiveness, direct subsidies, tax-exempt financing and so on-that benefit established interests at the expense of ordinary residents, workers and entrepreneurs.

The 20-block area surrounding the Downtown Cleveland Hilton should be called the “Government Subsidy District.” The Rock and Roll Hall of Fame has received more than $125 million in support from state and local government since it opened in 1995, according to the free-market Buckeye Institute (where I once worked). The three professional sports stadiums-where the Cavs, Browns and Indians play-all were (and are) government projects. Next to the convention hall, the grandly named Global Center for Health Innovation-225,000 square feet of county-owned office space constructed with the same tax hike that built the Hilton-has failed to meet leasing or revenue projections since its 2013 opening.

What Cuyahoga County does have is lots of taxes, regulations and union rules designed to protect high-wage workers. Cleveland’s Democratic mayor, Frank Jackson, wants to raise the municipal income tax-paid even by commuters who work in the city but live elsewhere-to 2.5% from 2%. Unions are pushing for a city ballot initiative to raise the minimum wage to $15 an hour, far above Ohio’s $8.10. On top of all that, the total sales tax in Cuyahoga County, 8%, is Ohio’s highest.

Much of the money for convention projects comes from a specially designated quarter-cent sales tax passed in 2007, which brings in about $40 million annually. Yet that’s still not enough to cover the costs. The city is kicking in tax revenue from downtown’s Jack Cleveland Casino. The 5.5% county bed tax paid by Hilton guests will be diverted to hotel debt, as will the property taxes it pays, except those for public education.

To politicians’ credit, the hotel was completed on time, on budget and scandal-free. If all goes well, Cuyahoga County thinks it can pay off the debt after 30 years, let the sales-tax increase expire on schedule in 2027, and in the meantime make a small annual profit. What could possibly go wrong?

Cauchon, a former national reporter for USA Today, lives in Granville, Ohio