Talks between the city, county, Convention Center and Nationwide that began early last year resulted in a complex and opaque deal to refinance a loan used in the public purchase of Nationwide Arena.

In February 2019, as officials rushed to finalize a last-minute deal to build a Downtown soccer stadium and keep the Crew SC from leaving Columbus, a Nationwide executive sent a text message to the head of the Greater Columbus Convention Center.

“Pursuant to our phone conversation this evening, I have attached the proposed term sheet for your review,” Brian Ellis, president of Nationwide Realty Investors, the real-estate arm of Nationwide, wrote Don Brown, executive director of the convention authority.

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The sheet requested tens of millions of dollars of the convention center’s revenue as repayment on a non-performing $44.2 million loan, which Nationwide extended to the authority in 2012 to publicly purchase Nationwide Arena from the firm.

Also, for the next half-century, the city of Columbus would have to divert tens of millions of dollars in property taxes that would mostly go to pay Nationwide interest on the arena loan, according to documents obtained by The Dispatch from the convention authority under the Ohio Public Records Act.

There was a big problem with the proposal: Elected officials in the past had said it could never happen.

Only city and county “casino” revenue could be used to repay the loan — ever — and the public had no risk whatsoever if that revenue fell short.

But Nationwide appeared to have a new bargaining chip.

Ellis’ text message to Brown called for a meeting to be convened quickly between Brown, Ellis and officials from Columbus and Franklin County because “We are trying to respect the Crew’s deadline of March 1.”

The Crew doesn’t use Nationwide Arena and had no role in its public purchase or the loan agreement. But the Crew, the city and the county did have a huge issue pending with Nationwide: They needed 21 acres of the insurance giant’s land to build an already announced Downtown stadium. Other documents show that, at that time, the team faced a March 1 deadline with Major League Soccer to have a final stadium contract signed.

Ellis’ attached list of demands was marked “Confidential — Not for Distribution.”

The Columbus City Council, in a vaguely worded ordinance “to outline plans and certain commitments” relating to the Arena District, voted 5-2 in July to approve the deal.

Those property taxes will be diverted from the Metro Park system, Columbus Zoo & Aquarium, Columbus Metropolitan Library system, and agencies that serve the mentally ill, seniors, at-risk children and others.

When the public purchased Nationwide Arena in 2012, city and county official stressed that it was structured in such a way that Nationwide could never require that any of those revenue streams repay it. The contract repeats twice in bold, underlined type, that the loan “is not a debt of the city or the county subject to payment from the general revenues or taxes.”

However, not only does the new agreement do what was promised couldn’t be done, but it also effectively shifted a city and county obligation onto the convention center and a list of other local agencies that had nothing to do with the arena’s purchase.

To date, the convention authority has never made payments to Nationwide on the loan, even as interest continued to swell on paper, because the city and county have never delivered enough casino cash. And it’s unclear that they ever will.

“Bear in mind that we do not have an obligation to pay ANYTHING (on the arena loan) unless and until casino money ... provides money for the loan,” Sally Bloomfield, chairwoman of the convention center’s board, emailed Brown in February 2019 in response to Ellis’ proposal.

Former City Auditor Hugh Dorrian said at the time the deal was brokered that he and former Mayor Michael B. Coleman wanted to ensure that no other city revenue would be dedicated to the arena. The city carried no risk, officials said.

"As far as I am concerned, Nationwide is carrying bad debt," Dorrian said in 2016, as the loan went unpaid. "The contract will not be rewritten."

But it was.

“A comprehensive solution was essential in order to maximize funds available to support the sites undergoing redevelopment and perpetuate the $1 billion in new investment,” Ellis said in a statement to The Dispatch last week.

“This was a complex transaction” involving many projects, including Crew stadium and others, which “created the opportunity to develop a broad solution to restructure the (uses for Arena District property taxes), provide much-needed infrastructure, enable debts to be repaid, and pave the way for us to continue, and ultimately complete, what was started more than 20 years ago,” Ellis said.

The meetings reopening the arena loan started in March 2019 in Columbus Mayor Andrew J. Ginther’s second-floor City Hall conference room, documents show. Ginther didn’t participate, his spokeswoman said.

Negotiations continued over most of last year, all while officials declined to say what was holding up the stadium-land transfer. The deed on the stadium land transferred on Oct. 31, 2019 — the same day the city and Nationwide signed the economic development agreement allowing the company to repay itself for the arena loan using property taxes.

Nationwide originally wanted the convention authority to pay it $1.8 million a year, increasing 5% every five years, for decades, until the combination of property taxes and convention center cash paid off the loan, per a loan amortization “model” created by the company.

Brown used Nationwide’s model, a spreadsheet that emails show served as the basis for the entire repayment plan, to craft a counterproposal of a single lump-sum payment — most of which also goes toward interest.

The convention authority will make its $51.5 million payment in 2029 out of surpluses from operating a publicly owned Hilton Hotel at the Convention Center. After that, the authority is out of the deal, with $26.75 million of its cash going for interest, a document shows.

Brown wrote in an email to his staff and to Bloomfield that his goal in crafting the lump payment was to shift as much of the convention center’s obligation as possible onto the property tax revenue that the city was planning to divert to the deal.

Documents show that for 21 of the first 22 years, $17.7 million of all the property taxes to be diverted to Nationwide — or 94% — would go only toward interest.

Over a half-century, Nationwide will collect a total of more than $53 million in interest before the $44.2 million in principal is retired, the model calculates.

The “tax increment finance,” or TIF, money being diverted is typically used to pay for public infrastructure, such as streets, sidewalks and utilities, to support and encourage new developments.

Asked about his reference to the Crew’s March 1 deadline, Ellis said: “From the outset, all parties recognized that there were multiple important deadlines for these projects and worked hard to meet them.”

Brown said he has no idea what Ellis was talking about in his text comments about a Crew deadline, and he doesn’t recall ever asking Ellis why he wrote that in connection with setting up a meeting on restructuring the arena loan.

“We take a long view,” Brown said when asked how it was in the public’s interest to renegotiate these deals at all. “We think it’s in the community’s best interest to settle our debts and to have a debt-free arena Downtown.

“I’m sure there would be some people who would be happy to take advantage of the other party. That’s not the Columbus way of doing business.”

bbush@dispatch.com

@ReporterBush