Tampa’s tax surcharge plan for the Rays doesn’t seem entirely thought out

Check it out, there’s an actual plan afoot to help pay for a new Tampa Bay Rays stadium in Tampa!

“[We will be] working with the landowners to create a CDD type of environment for an entertainment district. Every hot dog, beer purchased in that district will go toward the stadium so it’s not taxpayer money, it’s a fee-based structure,” said Hillsborough County Commissioner Ken Hagan, the county’s chief negotiator with the Rays.

A CDD, for those unfamiliar with this particular facet of Florida law, is a Community Development District, which effectively places a tax surcharge on a certain area in order to pay for new amenities. (CDDs for a Rays stadium were previously floated as a possibility back in the spring.) If done correctly, it shouldn’t cost taxpayers extra, since this is genuinely money the local government wouldn’t be collecting without the new tax — it should just come out of any windfall profits that property owners would otherwise make as a result of the new project.

There are, however, a couple of problems here. One is that it’s not entirely clear whether a new stadium is the kind of amenity that actually makes nearby land more valuable — and if it doesn’t, you could end up seeing property values plunging as nobody wants to buy land that comes with a whopping surcharge, or even see the CDD go into default, as has happened from time to time. So if this does end up part of a Rays stadium funding plan, it’s going to be hugely important who’s on the hook for those payments if the CDD money falls short.

Then there’s that puzzling statement by Hagan that “every hot dog, beer purchased in that district will go toward the stadium.” He also said “we are not going to raise sales taxes,” so presumably there won’t be an actual surcharge on sales of stadium-district beer, just on property taxes for stadium-district beer gardens. Which is a pretty indirect and hand-wavy way of ensuring that the stadium will in some way pay for itself, probably because without the hand waving, it’d be immediately clear that there aren’t enough windfall hot dog profits to build a near-billion-dollar stadium.

In short: There’s a still a mammoth hole in any Rays stadium budget, one that local business owners pledging to buy season tickets is not going to fill. The haggling over a site for a potential Rays stadium may have seemed like the hard part, but now that actual money has to be put on the table, this is when the game really begins.


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11 comments on “Tampa’s tax surcharge plan for the Rays doesn’t seem entirely thought out

  1. @Neil:

    Isn’t a CDD a TIF of a different name/color?

    And isn’t it taxpayer money because the tax on the $15 I spend on a beer at the stadium or for $8 at the brew pub a block away in the CDD/TIF is still my money and the tax is crowding out a tax that could be used for things (schools, roads, etc.) other than subsidizing the owners?

    Also, whether its a CDD/TIF on property taxes or sales, it doesn’t matter. Either the owner is going to pass the cost on down to me so he/she can make her profits or they won’t go in the endeavor.

    1. A CDD is different from a TIF in that it’s a surcharge, not existing taxes that get siphoned off. The example I always think of is Central Park, which was paid for in the 1860s by special charges on all the landowners along the sides of the park.

      It’s a fixed charge, so there’s no real way for the owner to pass the cost along to anyone. (If they could get away with charging more rent for their space, they’d want to do so regardless of whether there was a CDD fee.) It works in terms of not being a drag on the public treasury; whether it can actually raise the money required is another thing entirely.

      1. But don’t surcharges always gets passed on? I see them all the time—an FAA surcharge on a airline ticket, local fee/surcharge on cable, phone, etc. None of those companies want to dig into their profits, so they pass the surcharge directly onto the customer.

        1. Yeah, and when you decide whether to cancel your cable, do you look at what it’s costing you before surcharges, or what charge is actually showing up on your debit card each month?

          The same goes for land prices. If somebody can get $X a square foot, they’d be idiotic not to charge it whether there’s a surcharge in place or not.

          1. I look at the end cost. Or more accurately, my WIFE looks at the cost on the credit card bill and goes ballistic when she sees the cable bill.

  2. “…Every hot dog, beer purchased in that district will go toward the stadium so it’s not taxpayer money, it’s a fee-based structure…”

    Well, which is it? A tax on dogs and beers or a “fee”?

    CDD’s are usually applied to residential areas. It has nothing to do with the value of your property, it’s just your share of the infrastructure bond. If this will be “a CDD type of environment”, I assume the businesses within the district will owe their share of the stadium bond regardless of any “windfall profits” or increase in the value of their property. With a bond of $several-hundred-million spread across a relatively small number of payers (compared to a residential district), the annual tax would be pretty outrageous.

    And if the business doesn’t own the property who’s going to be paying the bill? I kinda doubt they’ll be sending bills to lessors instead of lessees. And I’m 100% sure the businesses within the proposed district won’t get to vote on it. It’s all so very wrong.

  3. Smoke and Mirrors are Commissioner Hagan’s forte, along with his puppet, the County Administrator. When Hagan says they won’t be raising sales taxes, that’s just playing with semantics. Putting surcharges on hot dogs and beer consumed at (or around) the park is adding a financial burden on the attendee who already paid a fortune just to get in the park. And when you do that, if the hot dog and a beer ends up costing $25 or $30, you probably won’t have enough volume to generate much money. Then who do you stick for the balance? Yeah, you guessed it, the people that never really attend a game and didn’t want this park in the first place. At this point, we all get the (not so) wierd feeling of someone’s hand slowly slipping into our pockets searching for our wallets.

    1. “there won’t be an actual surcharge on sales of stadium-district beer”

      Should I have made that clearer?

  4. Easy fix – ticket tax!

    $35 ticket tax * 2m attendance * 25 years @ 5% interest = $1b for stadium construction.

    You’re welcome, Tampa.

    1. Oh yeah, it’s just like you ordinary fans to siphon a billion dollars out of an owner’s pockets just by snapping your fingers. Honestly, you little people have no idea how much hard work goes in to owning a professional sports franchise.

      Think of us for once, will ya?

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