Friday, April 20, 2018
News Roundup

Financing a new stadium for the Tampa Bay Rays may need to be creative

St. Petersburg leaders will get their first look Sept. 28 at a private developer's plans for a new baseball stadium at Carillon business park.

The select few who have seen Darryl LeClair's drawings and demographics have come away impressed. But so far, no one is talking about the big question: Who would pay for it?

Or for that matter, how would any new stadium for the Tampa Bay Rays be financed?

Economics and politics have undergone a sea change since Tropicana Field cost $150 million and St. Petersburg dedicated $6 million a year from taxpayers' wallets to help pay for it.

A new stadium could easily top $600 million, more than the city's annual budget. Meanwhile, difficult times have hardened an unsympathetic electorate.

"People are fed up seeing money going to sports facilities,'' said Jordan Kobritz, professor of sports management at State University of New York at Cortland. "They don't like the perception that a billionaire owner is getting money when firefighters are being laid off and schools are being deprived of necessary funds.''

The Rays have said that Tropicana Field and its location will never generate enough money to support a competitive team over the long haul. Given the political climate, it's unlikely that government officials would simply turn over the public purse.

So business leaders are trying to come up with creative ways to pay for it, without direct tax hits on voters.

Maybe tourists renting a car from Hertz at Tampa International could pay a stadium tax. Maybe rich Chinese could help finance stadium costs so their children could study in the United States (yes, such a program exists).

And who would argue with the Rays shouldering a big part of the bill?

But Tampa Bay is not New York, San Francisco or even St. Louis, where baseball creates enough wealth to underwrite a privately financed stadium. If a new deal ever materializes, some taxation is likely.

Here are options that could come into play:

Bed taxes

Florida law allows a 1 percent tax on hotel and motel rooms for stadium construction. In Pinellas, that currently raises about $6 million a year. Pledged to 30-year bonds, this money would be available by 2016 and could reasonably cover $80 million to $90 million in construction costs.

In Hillsborough, the wait for bed tax money would be even longer. Those funds are tied up with other stadium projects for at least a decade.

Trop site conversion

If a new stadium is built elsewhere, the Trop site could probably sell for at least $50 million in an improved economy. Converting that acreage to residential or commercial uses also would generate property taxes, where none now exists.

Since these revenues would not exist without moving the team, officials could justify plowing a like amount into new construction — as long as the new stadium ended up in St. Petersburg.

But a counter-argument also could be: Let Hillsborough pay for the Rays and use the new tax revenue for other civic projects.

Car rental surcharges

About 120 government bodies impose surcharges on car rentals, figuring that out-of-towners will shoulder most of the load.

In California, San Mateo County just passed a 2.5 percent car rental tax to balance its budget. Dozens of counties use car rental taxes to underwrite sports venues.

"It's viral,'' said Bob Barton, president of the American Car Rental Association. "You are taxing people who are not voting you into office. It's the Boston Tea Party. Taxation without representation.''

Florida imposes a $2 a day surcharge that is mostly used for road construction. Because of Tampa International Airport, that tax generates about $12 million a year in Hillsborough County.

If Hillsborough politicians tacked on another $2, they could pledge that to 30-year bonds and raise $160 million or so toward stadium construction in Tampa

They seem to have leeway.

A 2011 study by the Global Business Association concluded that a one-day, $55 rental at TIA would include $5.87 in taxes, tied for 10th lowest out the country's 50 largest markets.

Adding another $2 would bring that to $7.87, only slightly above the national average of $7.60.

The downside is that taxes and airport-related fees don't go unnoticed, which could mean trouble for a region dependent on tourism.

People on traveler websites use terms like "highway robbery'' while describing add-ons at Sky Harbor International in Phoenix, where taxes support an NFL stadium, spring training stadiums and airport improvements.

A $371 rental car in September came to $556 after adding Sky Harbor's fees and taxes. That same car in Tampa would cost $203.

"At TIA you have made phenomenal gains adding international flights with Edelweiss and British Airways,'' Barton said. "Now you get a Brit on a 21-day vacation saying, 'They just put a $5 a day tax to build a stadium for the Rays. Let's fly into Orlando and save $100. We are driving all over the state anyway.' "

Such a tax, however, could benefit only Hillsborough. Pinellas doesn't have a major airport, could not raise much money with a car rental tax and local renters — not out-of-towners — could end up paying most of it.

Taxing district

A special taxing district in downtown Tampa financed the convention center, which will be paid off in a few years. The taxing district will then generate enough money to support at least $100 million toward stadium construction. Unless the city and county shut the district down, its funds cannot be used for police, fire or other general services — only for more development.

A similar taxing district could probably raise lots of money at the Toytown site off Interstate 275 in Pinellas. It's vacant and ripe for appreciating property tax values — if anything can actually be built there.

A downtown St. Petersburg taxing district already encompasses the Trop, but the Pier, a new police station and other high-profile projects would compete for any funds. A stadium in Carillon like the one LeClair is pitching probably could not meet the criteria for this type of financing.

Have the Rays pay

A new stadium would raise the Rays' income, lower its costs and enhance the franchise value. Many argue it's only fair the team help pay.

In 2008, the team indicated it would front $150 million toward a waterfront proposal, about what Miami and Minnesota recently paid toward their new stadiums.

Another way the Rays could contribute is by sharing ticket surcharges, naming rights and other stadium-generated revenues to pay off construction bonds. But since the team plans to keep those revenues, using them for construction would likely drop the Rays' up-front contribution by a similar amount.

Negotiations would determine how much the community can squeeze from the Rays.

Meanwhile, construction costs tend to rise every year, said Kobritz, the SUNY Cortland professor. "You could easily be looking at a $700 million stadium.''

Would a new stadium generate enough new cash to push the Rays much beyond $150 million?

"In the Tampa Bay market? Maybe,'' Kobritz said. "The St. Pete market at (the Trop) location? Not today and not in the future. And put that 'maybe' in big capital letters for the Tampa Bay market itself.''

Immigrants

A provision in immigration law called EB-5 puts foreigners on a fast-track toward permanent residency if they invest in the American economy.

It is particularly popular with rich Chinese and South Koreans who want their children to study and live in America. Last year, EB-5 investors invested more than $1 billion into shopping centers, hotels and strip malls

"I don't know why a stadium would be any different,'' said William Flynn, an immigration lawyer for Fowler White Boggs in Tampa.

A foreigner qualifies for a temporary visa by investing at least $1 million into a project that creates at least 10 jobs — or $500,000 in areas of high unemployment. If the jobs actually materialize, the visa becomes permanent in two years.

"We are selling green cards,'' said Flynn. "We have already sold the stock and bond markets to foreign investors, why not green cards?''

Investors expect to be repaid. It's not as if 50 would plunk $1 million each into a stadium and simply walk away. But they typically accept lower returns than traditional bond investors, which can slash financing costs. Over 30 years, the difference between 2 percent interest and 6 percent could save a stadium project millions of dollars.

Atlantic Yards, a $1.4 billion Brooklyn development anchored by an NBA arena, refinanced to a lower rate with $223 million in EB-5 investments.

Tampa City Council member Yvonne Yolie Capin wants the city to become a "regional center'' for pooling and doling out EB-5 money. She has scheduled discussion time on the city's Sept. 6 council agenda.

"We are in a global market,'' Capin said. "It is very important for us to be aggressive about economic development.''

Capin envisions support for commercial centers, medical tourism projects and maybe the film industry. But a baseball stadium is not on the radar.

"This would be for what the city wants,'' Capin said. "Not what the private sector wants.''

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