The current Rays owners are eager — very eager — to get the funding for the proposed stadium squared away, and have given the Tampa and Hillsborough County a June deadline to approve funding, with a Memorandum of Understanding (MOU) released late Friday.
Just to recap, the Rays are asking the two governments to fund about half the cost of a new stadium. They are requesting $750 million from Hillsborough County, and $251 million from the city of Tampa toward a stadium estimated to cost $2.3 billion.
The planned stadium will anchor a larger mixed use development, which is separate from this agreement and will be privately funded, although no doubt some of the infrastructure that will be built as part of stadium construction will also serve the larger project, as will the transfer of land rights.
What does the MOU say?
The MOU outlines the public funding sources that might be used toward the stadium, although in the overview section we were able to review the document did not specify how much money could be derived from each source. (Keep in mind, this document is written by the Rays, speculating about city and county funding sources.)
Some of the funding sources identified are familiar to anyone following this saga, or indeed following earlier chapters of this saga. They include county tourism taxes, which can only be used for a narrow range of projects. This is a popular source of stadium funding; residents don’t pay these taxes so blowback is rare, and the funds can’t be used for schools or firetrucks so there is less sense that residents needs are being pushed out.
There has also been conversation about using revenues from the county’s half cent County Investment Tax (CIT), a sales tax adopted in 1996, and financing through Tax Increment Finance mechanisms, in this case through the Drew Park Community Redevelopment Area.*
But there are some surprises.
First, the Rays are suggesting that the county use what are called CDBG-DR funds for this project. Communities are awarded these funds after major disasters, so Hillsborough County received an allocation following Hurricanes Helene and Milton. The funds are flexible, with the understanding that some communities might want to use them to help store owners fix their facades and others might use it to repair a damaged playground. No doubt if you squint, using funds to build an entirely new stadium in an area that suffered no significant damage would be legal but I can’t imagine a world in which it is wise.
Next, while the county will own the stadium and the land it sits on, it does not appear that the Rays would pay rent (the MOU puts annual rent payments at $10.00). Should the anticipated tax revenues leave the county and city short in a given year, the team would pay rent to cover the difference, but the local governments would pay the team back once tax collections improved.
The team will cover insurance and repairs on the building (although we haven’t seen language spelling out which repairs — all of them? Just regular maintenance?) The MOU says that this is in recognition of all the other team investments (remember, the Rays wrote this!) but it seems like a lot for local government to forgo all taxes and all rent on a stadium.
Finally, the MOU is meant to remain in place for 35 years, with language spelling out extension options, but it’s not clear from what we’ve seen what penalties are in place should the team leave town.
What are we to make of the Rays funding MOU?
To put a positive spin on the large public ask, the Tampa Sports Authority have also shared an economic impact statement prepared by the firm AECOM.
The topline numbers are eye-catching: the direct economic impact of building the stadium (which would look at things like jobs created, contracts with local businesses and the like) would be a bit over $10 billion, and another $23 billion from the larger redevelopment project.
We’ve written before about how economic impact statements, even if they are conducted by on-the-level analysts, need to be taken with a giant mountain of salt. We have no doubt that building a stadium has a significant economic impact. But an economic impact statement only has value if you comparing different investment options and opportunity costs. If our local government gives the Rays $1 billion and 100 acres of land, the economic benefits may be as high as this report projects. But the report doesn’t ask the crucial question: what if our governments used $1B and 100 acres of land for something else? Would the baseball stadium still look like a good use of funds?
As long as these bespoke economic impact statements merely examine one particular investment as though it were the only investment on earth, it has little benefit to policy makers, other than as justification to approve a project they intended to approve anyway.
Moreover, those writing economic impact reports can only extrapolate from past trends into the future. We’ve seen, over the past six years, how the unexpected (the pandemic) and the semi-unexpected (hurricane damage) can bulldoze our expectations. I can understand why elected officials want to commission a study that appears to provide scientific backing to their decision making, but if we are honest, we just don’t know what the future looks like, especially when we are borrowing money when they are making financial commitments that will still be on the ledger in twenty years or more.
The squishiness of the numbers doesn’t necessarily mean that Hillsborough and Tampa officials should give this a “hell, no!” Decisions about public investment should be about values and goals and not just economic impact. Prisons have an enormous economic impact, that doesn’t mean we want more of them. As a community we spend money on many things whose economic impact is hard to measure — schools, bike lanes, museums, dyeing the river green for St. Patrick’s Day.
The conversation about subsidizing this stadium should take a hard look at the numbers, of course, to make sure the city and county reduce their risk and don’t fund a stadium at the expense of other important services. But it’s fine, too, to spend money on things our residents value if even if the financial return on investment is uncertain. The question for our elected officials, as stewards of our municipal finances and of our quality of life, is whether this particular use of resources is what is best for our community.
The Hillsborough Board of County Commissioners will be holding a workshop on the stadium plans this Thursday at 1:30 PM. Workshops are information gathering sessions, so no votes are taken and there’s no public comment. You can attend in person or stream the meeting if you want to follow the conversation.
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*If anyone wants to get further in the weeds on these funding sources, let us know in the comments.
