The Tampa City Council and Hillsborough County Commission will be voting on a Memorandum of Understanding (MOU) to allow the construction of a baseball stadium on the property currently occupied by Hillsborough College.
You can see the actual MOU, which is available through this Tampa Bay Times article.
Here we highlight some of the key features of the MOU, which includes several changes from an earlier draft, reflecting efforts to overcome objections that had been raised by elected officials.
Some
of the basics remain the same.
The guaranteed public funds are down a tick from the original ask of $1.1 billion to $976 million. The city contribution includes money raised by issuing bonds that will be repaid through future proceeds from the city’s share of the Community Investment Tax (CIT) and generated by the Drew Park Community Redevelopment Area (CRA), where increasing property taxes are captured through Tax Increment Financings (TIF).
Many of the basics remain the same
The county will own the stadium and the land it sits on, while the remaining land not used for the redeveloped Hillsborough College campus will be privately owned (and subject to property taxes, a detail that I don’t think was clear in the draft). Because the land and stadium are publicly owned they are not subject to property taxes. This MOU says very little about the larger mixed use development. Keep in mind that for many public officials the rationale behind subsidizing the stadium is that it will anchor a larger, robust, tax generating new commercial and residential node. It’s important to note that this MOU guarantees no such development, and realistically any development is years in the future.
But there are some key changes
Of interest here: some Council members had wondered what would happen if CRA income didn’t increase as expected, or if CIT collections fell below projections. Would the city need to cover bond debt service using general revenues? Here the Rays have agreed to make the city whole on any debt service payments, with the agreement that the team would later get reimbursed when (if?) tax collections increase.
My read here is that the Rays have agreed to absorb a bit more risk for the long term, no doubt in hopes of paving the way to quicker approvals this Spring.
The county is also contributing bonded upfront money, relying on two sources.
The first is their share of the CIT. The second is the Tourism Development Tax (TDT), the tax imposed on hotel stays, the revenues from which have limited use but which can be used for sports facilities.
The language around the CIT contribution is interesting. There is a long paragraph noting that CIT funds can ONLY be used for “horizontal” development, which is developer speak for infrastructure that includes roads, sewers, sidewalks and the like. (“Vertical” development would be buildings).
…..Public Horizontal Capital Improvements associated with the Overall Development (to be more clearly defined in the Project Agreements) shall not include the ballpark building itself or other enclosed occupiable vertical buildings primarily intended for sports, entertainment, office, retail, residential, hotel, or similar uses, except for minor accessory structures customarily associated with infrastructure improvements.
The agreement claims that such infrastructure investment has a general public benefit, no doubt addressing complaints from some elected officials, most notably Commissioner Josh Wostal, that CIT funds should not go toward a ballpark. It will be interesting to see whether this language is enough to win Wostal’s vote.
The county is expected to contribute another $100 million that goes beyond the funds expected from CIT- and TDT-backed bonds. There is still language, as before, that the county will seek to use $30 million in federal hurricane recovery funds to address stormwater issues, although it’s not clear whether that would be part of the $100 million or an additional item.
The Rays, according to this MOU, will give public funders access to their own financing information prior to the commitment of public funds, addressing county and city concerns that they didn’t even know whether the team had or could access the over $1 billion that represented their share of construction.
The team also asserts the right to impose additional district fees and to place a surcharge on tickets, the revenue from which would pay off their debt. The ticket surcharges could not exceed $3.50, and would not be imposed on tickets under $40. [Question: since the proceeds of ticket sales go to the team, why do they need a “surcharge,” can’t they just set ticket prices at a level that will allow them to retire their construction debt? My assumption is that these revenues are treated differently for tax purposes, but I don’t know that with confidence.]
The previous draft had the Rays paying $10 a year (!) in rent to the CRA. That language is gone. The only mention of rent is in the discussion about the Rays making up CRA shortfalls should tax collections lag; they are calling these hypothetical contributions their “rent,” even though it would, as per the agreement get paid back.
So where are we now?
So, my overall takeaway (with the caveat that my eyes glazed over at certain points so I may have missed details, and the further caveat that some important details are left to later agreement)?
The Rays are willing to take on more risk than they had previously indicated, most likely to expedite public approvals. They have agreed to take on all construction cost overruns, and they are responsible for maintaining the stadium, although they note the possibility of requesting further TDT funds for future capital improvements. In exchange they get a stadium that is tax free, and apparently rent free. They get revenues from parking, concessions, naming rights, and can use the stadium for non baseball revenue-earning events.
They get the potential to engage in a much larger commercial development, but they have no pressure or obligation do so.
My prediction is that the changes will be enough to get both the City Council and County Commission to approve the MOU, perhaps with minor tweaks.
