FC Cincinnati asks to pay property taxes on stadium site as if it weren’t building a stadium there

One of the big unknowns in F.C. Cincinnati‘s plans for a soccer stadium on the site of a high school football stadium in the city’s West End has been how much the team would pay in property taxes to the local school district. We finally have a figure, and West End leaders are not at all happy with the offer:

Under the deal revealed Monday evening, FC Cincinnati would:

• Pay $100,000 a year in property taxes during construction.

• Pay $250,000 a year in property taxes the next five years, from 2021-2026.

• Pay $500,000 a year in property taxes the five years after that, from 2027-2031.

• Pay an amount, up to $3.6 million, based on team profits.

But school officials calculate that, if FC Cincinnati builds a $250 million stadium as expected, the club should under typical guidelines pay CPS more than $2 million a year in taxes.

And this is actually the second deal FC Cincinnati offered the school district. The district rejected the first, a $70,000-a-year offer, telling FC Cincinnati it was “very disappointed.” The team came back with the current $100,000 a year, but the school district still seems unsatisfied.

“There’s not a magic number, per se, but there’s a wide gap between $70,000 and $2.8 million,” said CPS spokeswoman Lauren Worley.

That there is! Excellent powers of subtraction on display there!

The philosophical gap here is equally easy to see: F.C. Cincinnati’s owners are saying, Hey, you’re not getting much tax money from the land now, at least this is more than that, while Cincinnati school district leaders are saying, Uh, dudes, you don’t get to be taxed on your $250 million stadium as if it were vacant land. Team owners are also citing the $20 million “investment” it plans to make in the school district, most of which consists of building a new high school football stadium to replace the one they’d be tearing down, so yeah, not a huge net gain there.

F.C. Cincinnati president Jeff Berding also said yesterday that the team’s owners will be making a decision by the end of the month on whether to put the stadium in the West End, in the Oakley neighborhood, or across the Ohio River in Newport, Kentucky. Since the school board has to approve the West End deal, it doesn’t sound super-likely that that’s going to happen, but you can still do a lot of haggling in 18 days.

7 comments on “FC Cincinnati asks to pay property taxes on stadium site as if it weren’t building a stadium there

  1. No doubt by the time the higher payments go into effect in 2027 they’ll be looking for a new stadium somewhere else or will cry poverty and ask to renegotiate–assuming they’re even still around then. And that $3.6 million payment “based on profits” will never happen because the team will find a way to find no profits even if they’re rolling around in loose cash.

    • Exactly. If by some miracle they turn a $10m profit annually, you can be assured that FC Cincinnati will enter into a ‘management agreement’ with a shell company (perhaps even a non resident one) controlled by the owners and charge themselves a minimum annual prof services fee of $9.8M or so.

  2. Why not just build a $20,000,000 soccer stadium and share it with the high school. The school can even have naming rights on football nights. Extrapolating from my property tax bill, they’d pay about $400,000 a year-a buck a ticket-. It’ll be lower as depreciation sets in. A win win. Let’s do it.

  3. Commercial/recreation buildings are not taxed at the residential municipal tax rate in most districts. I don’t know how Ohio (or the specific county) does these calculations, but typically school requisition assessments are calculated separately from the assessment for municipal taxation purposes.

    In many (I suspect most/all but I’m certainly not up to date with every state or province) districts the assessed value for taxation purposes is dependent on a theoretical selling price between a willing seller and a willing buyer (it’s theoretical because most of the properties in question will not have been sold in the last year). Some properties (public buildings, infrastructure etc) cannot reasonably be assessed in the way residential or commercial property is assessed. The calculations themselves are quite detailed, but this is a simplified description of the process.

    Establishing what a fair market value is is complicated when it comes to rec facilities because they have so little actual market value… no-one other than an MLS team owner would ever want to buy this stadium, and none of the other MLS owners would be eligible to buy it as long as Cincinnati ownership is in place. From the day it is completed it’s fair market value could conceivably be $0 (IE: no potential buyers and large annual operating losses.)

    Fortunately, assessors can also use an “income” calculation to determine FMV for unique properties (IE: take the building’s total earnings and recapitalize at anywhere from 6.5-10%). This works well for hotels and leaseable commercial space, but less so for rec facilities/buildings.

    For most municipally owned rec facilities (which are tax exempt of course), assessed value can be as little as 10-15% of construction cost. Arenas, swimming pools, gyms etc tend not to generate enough revenue to cover their operating or construction costs (whether they are gifted to a billionaire or not).

    In the case of what is often considered “underdeveloped” land, there is also a concept called “highest and best” use.

    The example I like to use here is: You own a 50 acre field in the centre of Manhattan and plant soy beans and potatoes on it every spring. You appeal your assessment because you want your land valued at the same rate as the nearest rural NY farmland. Only fair, right?

    However, you would not be taxed on farmland value no matter how good your lawyer was. The authority would send you a nice letter saying that because your property could be sold and redeveloped into condos (allowing you to buy farmland elsewhere), it carries a market value of several billion dollars (let’s say $10Bn). So at a mill rate of 6.5, your tax assessment would be about $65,000,000. Plus school and other add on taxes/special levies, of course.

    Farming in Manhattan is a tough business.

  4. What a shocker, a public school district wants to wring more money out of a local business. Yet another reason to de-fund public education.

    Luckily, Cincy public schools have no veto power. The city council should tell them they’ll get $100k and like it.

    • Damn schoolkids, wanting businesses to pay their taxes so they can have pencils!

      Also, the Cincy public schools had to approve this plan because of the land swap involved, so they do have veto power.

      • We do need to de-find public education and start over, I’ll grant you that.

        My reading was that the Council gets to decide on use of the school’s property.

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