Wednesday, September 19, 2018
Business

Numbers game: Finding creative ways to pay for a new Rays stadium in Tampa

TAMPA — The Tampa Bay Rays have said for a couple of years they want a new ballpark that’s not just for baseball, but that draws fans and non-fans alike year-round.

So, they’ve thought out loud, how about making the stadium a showcase for local food? Or using training facilities as a community wellness center? Or letting a culinary school use the ballpark’s kitchens? While we’re at it, how about a water slide?

Turns out, that goal — to create a multi-use destination that increases traffic — plays a significant role in how the potential public-private financing is being put together for the Ybor City site the Rays have said is their top choice.

STUART STERNBERG: Tampa’s Ybor City is top choice for next Rays ballpark

Here’s a key principle:

"You want those who use it and go there to help pay for it," said Hillsborough County Administrator Mike Merrill, who is at the center of the Tampa-Hillsborough effort to study stadium financing options.

So what’s at the stadium counts. What’s around the stadium matters. And the design of the stadium, he said, should lead to "good fun but also to spending money."

In an interview last week, Merrill also touched on a related goal.

"We’re aggressively looking for private capital, private developers, to build a stadium," he said.

This is a twist in a stadium financing narrative that’s been driven by speculation focused on two things. One concerns the potential public sources of revenue, such as hotel bed taxes or community development property taxes already earmarked for infrastructure improvements in the areas where they were generated.

The second is of how much the Rays might kick in. Principal owner Stuart Sternberg has floated a number of $150 million, but has also said that could go up depending on how much additional revenue the stadium generates for the team from sources such as naming rights.

COLUMNIST JOHN ROMANO: Rays stadium share depends on how much they make in Ybor

Merrill didn’t say how much private capital the plan aims to bring in, but in the best case scenario it would be enough to reduce the public’s share of the project’s cost, which has been estimated, depending on who’s talking, at $500 million to $800 million.

In any amount, it means finding developers willing to take on the risk because they think there’s a return for their money. Unclear, at this point, is how investors would be repaid and whether they would get an equity stake in the new park. BluePearl Veterinary Partners CEO and Ybor real estate investor Darryl Shaw already owns a lot of the property proposed as a ballpark site, but Merrill said the effort likely would mean bringing in other developers or investors, too.

DARRYL SHAW: Quiet, humble — and $63 million later, Ybor’s big new player

At SunTrust Park, which opened last year, the Atlanta Braves spent $400 million developing The Battery Atlanta, a multi-use destination next to the stadium with a hotel, two office buildings, 550 apartments, a theater and about 20 restaurants. Still, the public contributed $400 million toward a ballpark that cost $622 million.

In Charlotte, developers are spending an estimated $2.5 billion to build apartments, offices, stores and hotels on a mile-long street that has Bank of America Stadium at one end, according to the Charlotte Observer.

"Does a stadium start to look like a shopping mall?" Merrill said. If a stadium can create a more diverse entertainment experience for visitors, the thinking goes, it can create streams of user revenue that can help pay for construction.

Don’t bank on it, say skeptics like Vanderbilt University sports economist John Vrooman. He told the Tampa Bay Times last month that "ballparks are generally bad anchors for economic development," and it’s common for proponents to overstate the likely spin-offs. He doubted that surrounding development would be profitable enough to entice developers to take on a significant part of the cost of a new stadium.

PREVIOUS COVERAGE: Potential pieces of Ybor stadium financing plan

Another potential source of revenue for the stadium is tapping into economic activity that is attracted by and grows up around the stadium.

There is a variety of ways to do this, and Tampa Mayor Bob Buckhorn recently outlined one possible scenario. The city could create what’s been loosely described as an entertainment district around the stadium. Inside the district, a surcharge on sales of food, drinks and merchandise could generate revenue that would be used to help pay off stadium construction bonds.

"Because a stadium is there," Buckhorn said, "restaurants are going to do better, alcohol sales are going to be higher, T-shirt sales, whatever it may be. The hope is that monies generated by construction of the stadium — be it commercial, residential or retail — be used to pay some of the debt service on the stadium, so you shift the burden from the taxpayers to either tourists or to folks who are benefitting from the construction of the stadium."

Many questions that would go along with this idea, such as how big such a district would be — a block around the stadium? Two blocks? 10? — are nowhere near being worked out, much less formally proposed. So it’s not surprising that even plugged-in Ybor City business leaders haven’t heard much about it.

The Ybor City Chamber of Commerce has come out in favor of moving the Rays to Ybor and said its 300 members plan to be involved in every phase of the process, including fundraising, development-related issues and the design of a ballpark that blends into Tampa’s most architecturally distinct neighborhood.

That said, "I don’t know how much the average business owner is aware of the different things that are going into this and how it could impact their business one way or another," said Crowbar owner Tom DeGeorge, the chamber’s incoming chairman and the vice president of the Ybor Merchants Association.

In any case, the idea that Buckhorn described is only one of several options available to local officials.

"We’re not even close to the point of being able to slice it that finely," Merrill said, though he said it’s likely local officials will look at some variation of the idea Buckhorn mentioned.

Those variations include creating a community development district (there are lot of CDDs for suburban Hillsborough neighborhoods already) or a special district similar to what the Legislature approved this spring for the $3 billion Jeff Vinik-Cascade Investment project known as Water Street Tampa.Yes, there are legal and technical differences between the two. Think of "entertainment district" as a more generic label that could get tacked onto either.

Each needs different approvals to be created. And a surcharge on sales is not a given. In a CDD, money could be raised through an assessment based on property instead.

With each, however, the goal is the same.

"A stadium is a magnet for, arguably, development that might not otherwise occur," Merrill said. "What you’re trying to do is assess growth, new development, within a district that benefits from a stadium."

MORE: Go here for more Business News

Contact Richard Danielson at [email protected] or (813) 226-3403. Follow @Danielson_Times

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Published: 09/19/18