UPDATED: Sports stadium efforts could surprise taxpayers, use 'half-cent' tax dollars
UPDATED: The Miami Dolphins say the clause in question does not apply to them because they are not a 'municipality or county.' The story has been updated to reflect the Dolphins' statement.
A 25-word clause in a bill pending in the Florida Legislature could force local communities to face an unexpected tax for the upgrade of their sports stadiums.
The bill allows sports teams to apply for up to $3 million per year in sales tax breaks from the state of Florida.
But the $3 million sales tax break comes with strings attached. Any sports team getting that $3 million must prove that sales have increased by $50 million after the stadium renovations.
If the team is not able to increase sales—and by extension sales taxes—by the allotted amount, it would be forced to reimburse the state.
But the reimbursement money wouldn’t necessarily have to come out of the pockets of the sports team. It could come instead from taxpayers in local municipality.
The Dolphins say the language does not apply to them because they own and operate the facility, not the local county.
A clause tucked deep in the bill allows a sports stadium that falls short of the increased sales target to use money from a local government’s “half-penny” sales tax to repay the state.
The half-cent sales taxes are usually approved for specific purposes—things like education, infrastructure, healthcare, etc. Voters in cities and counties often agree to pay an extra local tax on top of the state’s 6 percent sales tax in order to provide additional resources for local initiatives. The tax rate in parts of Miami-Dade, for example, is 7 percent.
The additional 1 percent local sales tax brings in about $138 million each year in Miami-Dade County, according to Department of Revenue figures. A bill pending in the Legislature would allow the county to raise the sales tax up to 7.5 percent to help provide additional funding for Miami-Dade College.
But some of the half-cent tax money from other counties and cities could, potentially, end up going to the stadium efforts if teams are not able to meet revenue targets. If the sports team is able to secure $90 million from the state and misses revenue targets for 30 straight years, that $90 million could come out of the pockets of local taxpayers via the local sales tax. Most voters agreed to pay the higher sales tax in referendums that specified specific projects or initiatives.
The deals could bring up memories of a widely-panned contract between the Miami Marlins and the city of Miami, which explicitly left Miami on the hook for property taxes at the team’s newly built parking garage.
Many did not know about the strange clause in the Marlins deal until the deal was signed, and angry residents accused the city of being outsmarted by the well-heeled legal team of the Marlins.
The Marlins, who are struggling to fill the seats in their renovated stadium, are one example of a case where shiny new digs did not lead to a huge boost in ticket sales. If a sports team goes the same route, local taxpayers could end up footing the bill.