Saturday, December 14, 2019

Dispatch on Stadium: "You paid for it"

Austin and Columbus will always be tied together for as long as MLS exists. It's been a few days since this piece published in the Columbus Dispatch went live. It hit a nerve with some support as well as a few city planners. It's behind a paywall, so I figured I re-post it here for all to read.

I don't do this for money (this site is, has been, and always will be, ad-free and completely independent). This is for information purposes only.

By Bill Bush
The Columbus Dispatch
Posted Dec 10, 2019 at 6:01 AM
Updated Dec 10, 2019 at 11:38 AM
Both Columbus and Austin are currently building new professional soccer stadiums, but taxpayers in Columbus ended up paying way more for theirs.

Columbus and Austin are both fast-growing cities that currently are constructing new professional soccer stadiums, with each project involving land donated by the public.

But when it comes to what the two projects will cost taxpayers, the similarities end.

In Columbus, the city, county and state agreed to make direct cash contributions toward the Crew’s new stadium and surrounding neighborhood totaling more than $200 million.

In Austin, taxpayers kicked in zero cash, according to a city official and documents

“We are not contributing a single dime of money to this,” said David Green, spokesman for Austin’s city manager.

Austin’s total public contribution is essentially to allow Precourt Sports Ventures, the former owner of Crew SC, to build a privately funded stadium on city land, and then accept the new facility as a gift to the public.

Despite that, the arrangement has been controversial in Austin for effectively allowing Precourt to avoid paying future property taxes on the $190 million-plus stadium, Green said.

If the team had kept title to the stadium, it would have qualified only for a 10-year tax abatement under Texas law, he said.

“The end result is that we handed them a piece of property and they’re going to develop it,” Green said. Aside from that, “the city didn’t spend any money, and we haven’t waived any fees.”

In Columbus, the stadium’s construction is being funded through a public-private partnership, which also will result in no future property taxes paid on the stadium itself, as it will be owned by a new public entity, the Confluence Community Authority.

The most-recent funding plan shows the city contributing $50 million; the county, $45 million or more, depending on bonds to be priced this week; the state, $20 million; and the new authority $25 million. That’s a total of $140 million or more.

That number doesn’t include at least $64 million in other improvements around the Arena District site being paid for by the city, including relocating utilities and building a parking garage that internal city documents estimate will cost $25 million. City officials have said those upgrades would have been done for any new development.

The team will contribute $233 million toward the project, including transforming the current Mapfre Stadium near the Ohio Expo Center into a new practice facility. The total project cost for the stadium, community sports park and practice facility is $373 million, not including the city’s additional $64 million in Arena District costs.

The new Crew stadium itself is now budgeted to cost $300 million — up to 37% more than the Austin facility.

The city of Columbus has said that none of its direct cash contribution will go toward actual construction of the stadium but may be used by the team to buy the land from Nationwide Realty Investors. The city also is paying for site and utility work, including street and intersection improvements.

In Austin, Precourt is paying for all site preparation, remediation, utilities, roads, sidewalks, parking ramps, street lamps, trees and bushes, Green said. Precourt has agreed to contribute almost $3.7 million to assist Austin’s transit authority, Capital Metro, to build transit improvements, including a new train station serving the stadium, according to the Austin development contract.

Green said Austin is under no contractual obligation to improve roads in, out and around the new stadium. It hasn’t even conducted a traffic study.

After giving the stadium to Austin, Precourt will lease it back rent-free for the first five years before being required to pay $550,000 annually in rent beginning in year six, for a total of $13.75 million over 30 years.

The Crew will pay annual stadium rent of $10, for a total of $300 over the 30-year lease.

“Yikes,” Nathan Jensen, a professor in the Department of Government at the University of Texas in Austin, said when learning of the Crew’s low annual stadium rent amount.

Jensen, who has studied the Austin deal, said Austin City Council negotiated its rent amount up from a proposed $1 a year to the final $550,000.

Columbus Mayor Andrew J. Ginther would not agree to be interviewed about the disparities in the two agreements.

Austin’s deal also includes a requirement “to cause at least 130 affordable housing units to be developed on up to one acre on the southeast portion of the land or other mutually agreed location,” according to the development contract between Austin and Precourt.

Columbus attempted to get such a requirement for affordable units but settled for language allowing a “good-faith effort” on the part of the team to facilitate the housing units.

Ginther spokeswoman Robin Davis said affordable housing wasn’t negotiated out of the Crew stadium contract because “the city fully expects developers to maintain the affordable housing limits.”

Austin also negotiated five “landlord days,” when the city can use the stadium free of charge for charitable or educational purposes, civic ceremonies or other such events not designed to compete with team events.

“We’re not tracking what’s happening in Austin,” Davis said. “We are committed to our investments in keeping the Crew in Columbus and the benefits that will bring the residents: a downtown soccer stadium, the redevelopment of Mapfre Stadium into a new training facility, a new community sports park and $1.04 billion in private development in the Arena District, expected to create a total of 3,200 jobs and add $6.5 million annually to city tax revenue.”

“There’s no doubt that Austin got a better deal than Columbus did out of this,” said Victor Matheson, an economics professor at the College of the Holy Cross in Worcester, Massachusetts, who is an expert in stadium financing.

But why?

Matheson attributed the disparity to a variety of reasons. Austin is a very attractive, fast-growing market that currently has no professional sports franchises. It also has a large and growing Hispanic population, a demographic highly interested in soccer.

But, mostly, Matheson attributed Austin’s lack of public investment in the project to the fact that, unlike Columbus, it didn’t have anything to lose. A new team wanted to come there, rather than a longstanding team trying to leave.

Just like buying a car, whichever side appears more desperate to close the deal typically ends up losing money, he said.

“Absolutely,” Matheson said. “The places who say, ‘Hey, you need us more than we need you’ are the places that tend to do well for the taxpayers.”


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