Thursday, November 27, 2003

City deal puts Cinergy name on expanded convention center



By Gregory Korte
The Cincinnati Enquirer

DOWNTOWN - The city of Cincinnati will sell the naming rights to its expanded convention center for $3 million less than originally agreed to. It took 14 months of negotiation with the Cinergy Corp. to get an agreement this week.

The city agreed in principle Tuesday to reduce Cinergy's contribution from $12 million to $9 million.

In return, the corporate parent of Cincinnati Gas & Electric Co. will drop its insistence that Cincinnati taxpayers - and most of its private customers - continue to purchase their energy exclusively from Cinergy for 30 years.

Much of the dispute was over electrical aggregation, which allows cities to negotiate with electric providers to provide lower electric rates for its residents.

Cinergy's relatively low rates make the idea of aggregation impractical today, Mayor Charlie Luken said.

"The important thing is that it preserves our opportunity to aggregate if we choose to," Luken said.

But the new agreement also allows Cinergy to take its name off the convention center and get a refund of all or part of its contribution if the city picks a supplier other than Cinergy, in effect giving the utility a $9 million advantage over potential competitors.

The city must purchase electricity for municipal buildings from Cinergy at state-regulated rates through 2010, according to the tentative agreement. Cinergy dropped its insistence that the city also continue to buy its natural gas from the company.

"For all, this is a great opportunity for Cinergy to be a partner for the city and for everyone involved," said Cinergy spokeswoman Kathy Meinke. "It's a pleasure to have our name on the convention center."

She said the cost of the naming rights would not be borne by its ratepayers.

The $160 million expansion of the Albert B. Sabin Cincinnati Convention Center, as it is now known, is set to begin in earnest next year, when television station WCPO moves its Central Avenue studios to the base of Mount Adams to make room.

Cinergy's naming rights money came last year, just as the expansion was about to fall through because the original sponsor, Delta Air Lines, withdrew its $30 million commitment after the airline industry's 2001 collapse.

Cinergy's $12 million was intended to give the city a cushion in the case of cost overruns. Assistant City Manager Timothy H. Riordan said city architects now have a better handle on costs and are confident they can get by with less money.

"We're further into the estimation process. We're still on target and on budget. We haven't had any scope-creep, and we've kept the budget pretty rigorously," Riordan said.

But Councilman-elect Christopher Smitherman, who will have to vote on the new agreement by the time it comes to City Council Dec. 8, said City Council should never have approved the project until it had all of the funding commitments in hand.

In addition to Cinergy's naming rights, the city still needs $20 million in state funding and a $20 million corporate contribution through the Cincinnati Equity Fund.

"We're either going to have to come back to ask taxpayers to put more money in, or extend the bonds to 40 years, which is going to make me 76 years old by the time this is paid off," Smitherman said.

"We need to make sure we have our ducks lined up before we blast off on another deal," he said. "This one can unravel right in front of us."

E-mail gkorte@enquirer.com




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