Five-day financing crash course. Day 4: The public's share

Day 4: The public share
The fourth in a five-day examination of the finances surrounding a new stadium, this section addresses the costs the Rays’ are asking government to bear. For previous coverage, see here.

Background: It appears that the Tampa Bay Rays will ask the city and county government for $300-million, on top of 12 acres of waterfront property, to construct a new ballpark?

Potential problem: Where is that money going to come from?

Analysis: This remains the biggest unknown of the $450-million stadium plan. City Council members have asked for details by May 16, while the Rays have publicly promised answers before June 5.

In the interim, all we can do is dissect the public statement so far made by the team.

In its documents, the Rays say that “No existing taxes will be diverted to fund the ballpark, and no new taxes will be imposed.”

Originally, most people assumed the Rays would seek the city and county property taxes generated by the Tropicana Field redevelopment. And that they may ask for some of the sales taxes generated by the Tropicana redevelopment.

But the Rays said last month that they would not seek property taxes for the stadium project, and that the team would ask the city and county to roughly split the public contribution.

So what’s left?

First, the county. Currently Pinellas County is contributing $5-million a year toward Tropicana Field construction debt from a 1 percent hotel bed tax. Extending the 1 percent bed tax appears to be the Rays’ most likely target, since the tax cannot be used to fund general county services.

Extending the tax would require the approval of the Pinellas County Commission. But it’s not that simple. The county cannot increase the hotel tax further, meaning that funds would not be available until 2016 if bed tax funds continue to pay off the Tropicana Field debt.

The Rays say their financing plan will address the remaining Tropicana Field debt.

The city meanwhile, is contributing a little more than $5-million toward Tropicana Field construction debt – mainly from the state sales tax revenues that are allocated to St. Petersburg. Again, extending those contributions to the new stadium could be a likely target.

But there could be other possibilities. A Rays’ preliminary financial analysis – which was shared with the city before stadium negotiations went public – said the team could tap several different sources: from potential parking revenues to federal tax credits to county and state transportation funding to city and county workforce housing incentives for the Tropicana redevelopment, to simply refinancing the existing Tropicana debt.

The city and the Rays broke off all financing discussions after the stadium project went public. And the document clearly is outdated. (In one place it says new state funding was “anticipated,” when the team now has abandoned that potential revenue stream. The document also includes money generated by a hotel that was originally contemplated for the southwest corner of the Al Lang site, but never became part of the project.) But the one-page analysis does provide some hint of what the Rays are thinking.

Read the document, along with the notes from a city official, here.

For discussion: If the bed tax is used, do you consider that a burden on local taxpayers?

Coming tomorrow: The finer points.

Comments

[Thomas]

Maybe it's time to put the brakes on this project and use a little common sense.

In order to make an informed decision on this type of investment, the public needs access to the entire financing plan AND the lease term sheet.

The public should not just see how they are going come up with $300M for the Rays - they should also see what the lease includes as far as return on that investment.

Is this another "look at the pretty pictures of the stadium and pay no attention to the man behind the curtain" deals?

What are the Rays demanding for their 1/3 investment - that in reality is nothing more than a lump sum rent payment...
- Will the Rays pocket the naming rights?
- What about parking and concession revenues?
- Will in stadium advertising profits be realized only by the Rays?

These are vital details in determining the merits of public funding for this project.

I think all citizens, Rays fans or not, should be skeptical of putting this on the ballot without these details being made public.

There is no need to rush this through. The Trop lease is in effect until 2027. There's no panic or urgency to this issue.

Publish the finance plan. Publish the lease terms. Then ask the voters to approve it.

If the Rays are unwilling to make these details available, I think it tells you everything you need to know about their "plan".

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Also, I see this type of quote a lot: "Extending the 1 percent bed tax appears to be the Rays’ most likely target, since the tax cannot be used to fund general county services."
Perhaps instead of creating a ballot initiative to build a stadium that the public does not need, there should be a ballot measure created that redefines what the bed tax may be used for.

That's right - instead of hiding behind the "the tax cannot be used to fund general needs" - let's go ahead and get some leadership here and change the way the tax can be used.

[Jay]

Aaron, you mentioned parking revenues. Does that mean income from existing parking, or anticipated revenues from the proposed location and it's parking plan?

[Don Mott]

Spot on Thomas. The 1% bed tax was intended primarily for the promotion of tourism. I don't see how subsidizing a MLB stadium promotes tourism. I am real curious to see what Kalt has up his sleeve here regarding financing. I think if they go for sales taxes from the redevelopment of the Trop property we could technically call that new taxes and although they are not "imposed" it is still money that is needed and it is still new taxes no matter how slickly you word it. Those new taxes would be diverted to subsidize millionaires while taxpayers would be stuck paying for the infrastructure. That is provided the site got developed, rented/leased etc., and produced the income predicted. I'm not sure an astute businessman would guarantee funds he doesn't have based on someones prediction. The City and County shouldn't either.

[Jon McPhee]

So the document Aaron references above, from the “pre-negotiations” between Rays and Council, that shows the Rays Boys' financial acumen, may be out of date. But it still points up some interesting thinking.

The projected cost of a new waterfront stadium is $437 million, with a footnote. That $437 million includes an $8 million “office” for the dudes. The footnote is the “TBD” for “financing fees, construction costs, etc.” That is potentially a very large number too.

What seems clear is that the Rays do indeed expect the City and County to foot darn near all the cost of this thing. They treat the Trop as just an asset they can dump into this thing. They treat a series of local taxes and lease income as the basis for City borrowing to constitute a share of the City’s and County’s share, and the principal and interest on those loans will come out of the taxpayer’s pocket one way or another. It’s already established that the Rays’ “contribution” is nothing more than the lease payments they already owe the City on the Trop.

The rest of this looks like yet more prayerful preying on taxing authorities of state and local entities, to be paid by Guess Who?

One can hardly wait for June 6, the day the Rays say they will unveil their financing plan. Should we be glad or sad that June 6 happens to be D-Day? I guess it’s better than waiting until 9/11 or December 7, which for you youngsters is the day the Japanese Navy sneak-attacked Pearl Harbor.

Hey, Aaron – tell everybody what all this implies about who the Rays expected to pay for this big deal, ok?

[Thomas]

The "Jake", "Camden Yards", "Safeco Field", the new "Busch Stadium", "Minutemaid Park", "Miller Park". I am sure none of the over 6,400,000 people per YEAR total that vist these six new parks on average versus the attendance averages from their respective old parks (Data going back to 1980, not just the new park honeymoon period)are "TOURISTS". No one would rather come to Saint Petersburg when they could go to Saint Louis, Cleveland, Houston or Milwaukee. Yeah Right. I believe the Rays attendance avererages will trump most of the other new parks by percentage increases. Why you might ask? The Rays, yes the Rays have one of the largest average walk-up / online tickets sales in MLB. They only have 3,000+ in season ticket sales leaving over 14,000+ in walk up and online sales INCLUDING many tourists. A new park will undoubtedly increase season ticket holders substantially. Just a thought.

[Thor]

Thor wonders what it is with the applesause guy Mott and McPhee. You two are always looking for some sort of scheme. Thor knows there is no scheme. There has been no untruths or anything hidden. Why do you two silly little men think there is. Everytime another new positive fact is written, you silly little ones try to find some other un-truth. Stop listening to puff daddy Hal, stomp stomp kathy and Hippie Boy Justin, and listen to Thor. Ball park = good, poop = bad and lies. Trop redevelopment = good and nice purses for thor, poop = more lies and an ever changing story. Thor has spoken, Thor is wise, Thor is brave, Thor knows shopping in St Pete will be great!

[Paul]

Thor, you are a bore. The same old lines, same old comments about the same people. Heck, you even post the same time everyday. How unoriginal. Hire a writer to come up with something new. We could care less about your toenails, or your shallow desires to go shopping. I can't imagine you ever saying anything nice about anything. You should move to NYC, where you would be better off being the unlikable, materialistic thing you are.

No stadium, not on St Pete's dime. St Pete has a great stadium, even Mayor Baker thinks so, he said it himself in the Times: http://www.sptimes.com/2005/03/19/Opinion/Rays_play_in_a_great_.shtml

[Wise Up Paul]

You people are nuts if you think the MLB doesn't promote tourism. Where the heck to you think half of the red sox and yankees fans come from? They fly down from the NE which is cold and crappy now to experience the beautiful FL weather and watch baseball. People from around the country would see a beautiful waterfront stadium rather than a tin can, and want to be here.

Paul, the stadium will be empty in 5 years if you don't build the new ballpark. Regardless of what the Rays say, and no matter how much you like the Trop, the place sucks and they'll be out of town. The Rays are now winning, but attendance isn't going up. Its the stadium. Who the heck wants to sit inside in April and May when they could be outside by the bay?

[You wise up]

Unless you have proof of that, I doubt its true. Baseball is played primarily in the summer, when even the NE isn't cold and crappy. Most tourists come to Florida in the winter.

I would imagine most Sox and Yankees fans who comes to Rays games are people who moved to Tampa Bay or Orlando from up north. They drive to the game, watch it, and drive home.

They don't stick around, for the most part, to spend even more money. They game is expensive enough as it is.

Nothing would change just because the stadium was in a different spot.

And in April and May, perhaps sitting outside by the Bay would be just peachy. In June, July, August, and September, however, it would suck.

[Paul]

Thanks for the comments on my comment... did you all read Mayor Baker stating that the Trop is just fine? He did, I swear he did, back in 2005, right here in this very paper. Now he's mr. silent on the whole thing... I personally have been asked by 3 of my neighbors how to get a 'no stadium' yardsign and have gone out of my way to get them one for their yard. Just did a drive around my block and counted 14, yes 14 'no new stadium' signs. I am pretty impressed by the sanity of my neighbors. And just to be fair, I have been keeping my eye out during my extensive jogs and bicycle rides around St Pete and have to say I saw the first 'let us vote' sign... is was on 5th ave south around 26th street. That's the only one I've seen, and don't think we'll see very many more.

One last thing, I could care less if the Rays leave. Seriously, am I un-American or something by saying that? I don't watch sports it just doesn't interest me. Why should I care if they leave? We are not in competition with other cities. We have an excellent, beautiful city full of tons and tons and I mean tons of things to do and see. Heck, the way I see it, if the Rays leave, we'll have 86 prime City owned acres to develop into jobs that pay a liveable wage or perhaps establish a new headquarters for a technology company.. again, actually helping the citizens of the City not millionaire sports owners. If they don't want the Trop, fine. Go. Scoot. Leave. Let St Pete continue to grow and preserve its beautiful waterfront... and lastly, I'm offended our City and Council could even consider the destruction of our waterfront at OUR cost by not giving the Rays owners the big middle finger when they first suggested this scheme. Guess I should get back to work.

[Don Mott]

Wow, last I checked the weather in Boston and New York was in the high 50's and up to mid 60's. You call that crappy? Do you have gate receipts showing that people are flying here for games, no. The Boston and New York fans are here because they migrated here and kept their home team loyalties. People don't normally spend hundreds and hundreds of dollars to fly a few thousand miles to watch one or two insignificant games. Especially when the same teams will be playing in their hometown within weeks. Just who benefits from increased season and walk up ticket holders? Certainly not me or the community as some would like us to believe. The only way the city or county can "benefit" as in earning money instead of giving it away would be if the Rays paid for the land and stadium and then paid the respective taxes on same. Paid for all infrastructure, traffic control etc. After all they are a for profit organization. Personally I don't care how many people go to a Rays game as long as it is costing the community $20 plus million dollars a year. Put a surcharge for construction on all of those tickets and watch what happens to attendance. Me myself I am sick of my government subsidizing wealthy for profit corporations ensuring that they become even more wealthy while their game satisfies what, 1 or 2 percent of the population. Let em leave then maybe there would be less cuts in local services.

[Brad]

“No existing taxes will be diverted to fund the ballpark, and no new taxes will be imposed.”

Enough said - bring on the New Stadium!