Wednesday, November 14, 2018
News Roundup

Plan to entice developers to help pay for Rays ballpark hits speed bump

TAMPA — Private developers would bear much of the cost of a new Rays stadium in Ybor City under a plan Hillsborough County officials are putting together.

Developers would benefit by cashing in on commercial, retail and other construction around a new ballpark, according to Hillsborough County Administrator Mike Merrill. Taxpayers would win by not having to foot as much of the bill.

But one incentive local officials hoped would help grease the deal is no longer in play.

Both the city of Tampa and the county applied to get the land around the proposed ballpark site designated as an economic opportunity zone, a new federal designation that gives tax breaks to developers who invest in low-income areas.

The Ybor site, however, was not among the 427 sites that the Florida Department of Economic Opportunity said this week will be recommended to the federal government.

Merrill said that is only a minor setback. He still believes the county’s plan is more viable than using tax dollars in an era when both the public and state lawmakers have soured against subsidizing professional sports stadiums.

"It would have been an extra bonus," Merrill said. "It doesn’t change the fundamental approach."

Both the city of Tampa and Hills-borough County in March nominated the Ybor site among others they wanted designated as opportunity zones. The designation, created through President Donald Trump’s tax cut legislation, is intended to help revitalize poor neighborhoods by allowing companies who invest there to defer paying capital gains tax.

City officials said they chose the area to boost the ballpark project but also because it is poised for investment and redevelopment.

"It definitely would have been a tool in the tool box that would have been helpful," said Christina Barker, Tampa’s special assistant to the mayor.

The state received more than 1,200 requests for the program from cities, counties, civic associations and other government entities. Each site was assessed according to poverty rates, population, unemployment rates and other economic indicators.

State officials did not provide specifics on why the Ybor ballpark site did not make cut.

"Feedback was incorporated as much as possible, and balanced with the economic analysis," said spokeswoman Tiffany Vause. "For example, a request in an area with very low unemployment may not have been chosen."

Having developers pay for part of the ballpark would be a departure from how most professional sports stadiums have been funded over the last two decades. Typically, communities have committed millions in tax dollars to attract or hang onto teams.

Merrill said it is too early to provide specifics. Negotiations with developers are not yet under way, he said. A new ballpark is estimated to cost roughly $800 million.

He expects that one often touted potential source of stadium funding — a portion of property taxes known as Tax Increment Financing or TIF funds — would only be spent on street, sewer and other infrastructure improvements needed before construction could start.

As much as possible, he said, the county wants to make the lion’s share of the stadium "private investment, private risk.’’

Rays officials declined to comment. In public, principal owner Stu Sternberg has talked in general terms about the team putting in about $150 million, or more if it can cash in on opportunities such as stadium naming rights.

Merrill said the Rays are aware of the approach the county is advancing.

"They realize, as all teams do, that the world of sports financing is changing and everyone is having to adapt," he said.

Ancillary development has been part of other stadium financing deals.

The Atlanta Braves spent upwards of $400 million building an entertainment district as part of its move to Sun-Trust Park in Cobb County in 2017.

The Battery Atlanta includes 400,000 square feet of office space, a 264-room hotel, three apartment communities and more than 400,000 square feet of restaurants, stores, and entertainment venues.

Revenue raised from the district goes toward the yearly $6.1 million that the team is contributing to pay off construction bonds.

But the $622-million ballpark project still needed $400 million in public funds, mostly from bonds and transportation taxes. Paying off those bonds will cost the public $16 million per year from a combination of Cobb’s general fund and hotel and car rental taxes, according to the Atlanta Journal-Constitution.

John Vrooman, a Vanderbilt University sports economist, said it’s doubtful that profit margins from surrounding development would give enough incentive for developers to take on a substantial portion of the cost of a ballpark.

"Ball parks are generally bad anchors for economic development and the external spin-off effects are usually exaggerated," Vrooman said.

While the Ybor site did not qualify for the opportunity zone designation, 108 other sites in Tampa Bay were nominated by the state.

They include land next to Port Tampa Bay and Tampa International Airport. Areas of South St. Petersburg, East Tampa and Tampa Heights were also recommended.

The U.S. Department of the Treasury has about a month to certify each state’s recommendations. Once the zones are approved, the federal government will begin drawing up rules for the program.

Contact Christopher O’Donnell at [email protected] or (813) 226-3446. Follow @codonnell_Times.

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