When TIFs go bad: the Reno Aces story

The Reno Aces, the Arizona Diamondbacks‘ Triple-A affiliate, are getting about a million dollars a year from the city of Reno to pay off their stadium construction debt, and it turns out every single person running for mayor of Reno thinks it’s a bad idea to keep making those payments. Or at least wouldn’t raise their hand at a candidate forum to commit to making the payments, which isn’t quite the same thing, but still.

So what would happen if Reno were actually to default on its stadium commitment? As it turns out, the original stadium deal was to pay off the stadium with the resulting rise in property tax receipts — so-called tax increment financing, or TIF — except that, as is so often the case, property tax receipts didn’t actually go up, leaving the city to fund the stadium debt out of its general fund. That means the city council must vote on making the payments every year, and there’s nothing stopping them from voting “no.”

If that were to happen, we’d enter uncharted waters: As the Reno Gazette-Journal puts it, “Well, baseball could leave. Baseball could also take the city to court.”

This is essentially the same scenario that Columbus was considering with the Blue Jackets last year, except that there it was a good-government group with a broken website that was pushing it, whereas here it’s actual people running for actual office who are threatening to play the default card. I’m kind of hoping they do, not because I have a particular interest in the fate of either the Aces or Reno’s budget, but because it would be extremely interesting to see how a court would rule on the legality of a city stopping payments on an already-built stadium. I suspect you’d see a lot of city attorneys — and good-government groups — poring over a hypothetical Aces v. Reno ruling for years to come. Though in the meantime, it’s still at least a good cautionary tale about the risky nature of TIFs, if anyone is listening.

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3 comments on “When TIFs go bad: the Reno Aces story

  1. Seems even riskier for the investors who bought those construction bonds.

  2. I see that the group behind the Reno Aces, New York restaurateur Jerry Katzoff, his son Stuart and retail billionaire Herb Simon, also have (at least) another cozy deal eerily similar to the Reno deal: they own a minor league team in Bowling Green, Kentucky, also with a stadium built in 2009, during the height of the Great Recession, just like the Reno park.
    I guess it was a recession for most, but not for a few, the chosen few?

  3. I love this blog.

    I live in Reno and where they built the stadium is just off the Reno Downtown strip, sandwiched (literally) in between the homeless shelter, the downtown bus stop, and the main police station. It’s in an area that most locals don’t want to go to at night, especially with the Reno strip 1/2 mile to the west, which is already developed, indoors (mostly), secure, well lit, etc etc. They built the stadium and the owners developed the land immediately around the land to turn it into a destination – but it really just hasn’t turned into that, and it’s just dead any time that the team isn’t playing. And it has spurred absolutely no development around the stadium – and by nothing I mean absolutely nothing.

    The day the stadium opened someone standing in line next to me said “Why did they build this in a toilet of a neighborhood?” and well…5 years later, it hasn’t changed one bit.

    Ultimately, I don’t think that Reno will default, for the sole purpose that the Aces still are a draw, still (somewhat) popular and, moreover, we’re already committed to a stadium and leaving it empty won’t make the payments go away. But I always thought that Reno was overmatched and really, kind of a stretch for a Triple A Market.

    But it seems the perfect example of what this blog is all about – turning small, growing successful city seeing stars and turning public dollars into private profit when the city would have been better off holding onto its money or perhaps standing at a random street corner and handing out $100.00 bills. Though it is a nice entertainment option 5 months out of the year…..

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