So Cincinnati Mayor John Cranley came out with his funding plan for an F.C. Cincinnati stadium on Friday, and while it included tax-increment financing as expected, it also included a whole lot of other proposed subsidies:
- $9.75 million from an existing tax increment financing district in Oakley
- $7.38 million from Blue Ash airport sale (money is currently in reserved fund)
- Up to $1.5 M from hotel tax annually will be used to pay off a $20 million loan for the project. But that will cost up to $45 million in hotel tax over 30 years to pay down.
- The city will also give FC Cincinnati a tax break for employees through a 50 percent job creation tax credit. Under a job creation tax credit, companies receive a certain percentage of the city earnings taxes paid by their employees back as the jobs are created.
Oh yeah, and this:
Under the plan, the Cincinnati Port Authority — a government agency — would own the stadium. That means the city, school system or county would not collect any property taxes on the entire property, including the stadium.
So that’s $37 million, plus that kickback of city income taxes on any jobs “created,” plus a full property tax break. How much that second bit will come to is tough to say without knowing how much the team would pay its employees (or players, though under the single-entity MLS model where the players are technically paid by the league, can they count as F.C. Cincinnati jobs?), but basically a 50% credit means kicking back 1.05% of team payroll, so if anyone has access to a typical MLS team’s payroll documents, we can figure that out. It’s not going to be much, though — even if the team spent $10 million a year on payroll, which is unlikely, it’d only be present value of maybe $1 million and change.
As for the property tax break, going by this example, the commercial property tax rate is about 8.6%, and the assessed value of a property is about 35% of its market value, so if a soccer stadium costs $250 million, then it would normally be paying $7.5 million a year, which would make present value of a full property-tax break worth more than $100 million. That seems high — maybe I’m wrong in assuming that “market value” equals construction price in tax assessment — but given that Minnesota United‘s $150 million stadium is getting $54 million in property tax breaks, and Cincinnati has higher property taxes than St. Paul, maybe not all that high.
In any event, as noted last week, the county is willing to put up $12-15 million for a parking garage, so at this point F.C. Cincinnati has offers of $50 million in hand (assuming the Cincinnati city council okays Cranley’s proposal), and is seeking $70-75 million. I know I probably shouldn’t be saying “Why quibble over $25 million?” when I haven’t had that much money in my entire lifetime, but you know, when you’re spending $150 million just on an MLS franchise, it does seem like less of a huge sum. Or, you know, maybe it’s a sign that MLS should lower its fees some in order to get in on a hot soccer market, but we’ve been over that one before.
UPDATE: So I wasn’t far off:
Hamilton County's @AuditorRhodes estimates FC Cincinnati will save $5M in taxes, per year, if Port Authority owns $200M stadium. (He also reminds me city would give stadium a nice tax abatement if privately owned) @WCPO
— Amanda Seitz (@AmandaSeitz1) November 20, 2017