Everybody suing everybody else over everything, same as usual

Lawsuit news! Nothing but lawsuit news!

Yeah. I think you can see why I don’t always report on every piece of lawsuit news: There’s nothing stopping anyone from filing suit for any reason, so while it’s often interesting to know what’s being challenged in court (hey, you never know what might succeed), most of it ends up being just a lot of legal fees signifying nothing, and there are more important things going on. Today’s a slow news day, though, so a perfect day to play catchup, and give you all some information for filling out your restraining order brackets.

MLS rejects Vegas expansion bid, $122m stadium subsidy plan promptly evaporates

Looks like Bob Beers can drop that lawsuit over the rejection of his petition drive to repeal Las Vegas’s $122 million MLS stadium subsidy: There will be no subsidy, because there will be no stadium, because there will be no Las Vegas MLS team, by decree of league commissioner Don Garber.

Major League Soccer Commissioner Don Garber told Las Vegas officials Thursday the city’s bid for an MLS franchise in 2017 or 2018 was unsuccessful. Sacramento, Calif. and Minneapolis remain in the competition for the 24th MLS franchise.

“Given the timing of our expansion rollout and the uncertainty as to when we might be able to move forward in Las Vegas, we are no longer considering Las Vegas as an expansion market until after 2018,” Garber wrote to Mayor Carolyn Goodman.

No one quite seems to know what that “uncertainty as to when we might be able to move forward” line meant, but really, it doesn’t matter — Garber’s the boss, so he can approve or reject expansion candidates for any reason or no reason at all if he wants.

Las Vegas Mayor Carolyn Goodman still wants to try to get a major-league sports team of some kind, but it apparently won’t be with the Cordish-Findlay development group, which spoke of its stadium in the conditional perfect tense yesterday. So, R.I.P., crazy-expensive soccer stadium that only got approved at all because the developers tricked the city council into giving them more lobbying time to pick off one swing vote. You will not be mourned, but we’ll still be a little sad to no longer have reasons to write about you.

Boston columnist compares Red Sox playing in Fenway to baseball’s history of segregation

I’ve been a newspaper columnist myself, so I get what they’re for. At their best, they combine insightful reporting with the kind of personable, entertaining writing that isn’t usually allowed on the news pages. (I’m not sure that distinction will hold up in the age of blogs, but it’s been useful for newspapers.) At their worst, they’re just people who are paid a lot of money to gush opinions that aren’t any more sensible or well-researched than those held by any random person on the street, but which for some reason go out to millions of readers.

The Boston Herald’s Steve Buckley, at least, is up-front about what his opinions are: This is a guy who last summer called himself “the cranky guy who screams that Boston needs a new baseball park.” So we shouldn’t be surprised that with Boston talking vaguely about somehow building a stadium for the 2024 Olympics if it gets them, Buckley, who doesn’t want Boston to get the Olympics, has nonetheless turned it into an opportunity to scream that Boston needs a new baseball park:

Fenway Park isn’t going to last forever. As Red Sox principal owner John Henry said last spring, the aging ballpark has “an expiration date.”

When?

“I think we’re several decades away, a good 30 years,” Henry said. “Hopefully we’ll still be around, but we’ll leave that for the next ownership group. Someone at some point in the decades ahead will have to address the possibility of a new ballpark.”…

But if we left all our problems to be solved by future generations, we’d still be dumping raw sewage in the Charles River. Jackie Robinson never would have gotten into Ebbets Field without a ticket.

And there you have it, the kind of opinion trap that columnists all too often find themselves building and then falling into: The Red Sox continuing to play in Fenway Park is like swimming in filth and segregation. I really doubt that Buckley sat down to write that yesterday, but eventually he got to a point where he needed to figure out how to argue that the third-most-valuable team in baseball can’t live without a new stadium, just because the team’s owner said Fenway should be structurally sound for another three decades or more, but three decades isn’t until the end of time, now is it?

This is the kind of logic that an editor really should catch and send back for rewrites, but opinion columnists don’t generally have their ideas rejected just because their editors think they’re screwy. Unless somebody powerful objects to it, that is, in which case it’s bound for the circular file. Some ideas are more unacceptable than others.

NASCAR Hall of Fame that Charlotte dropped $137m on is now requiring more bailouts

Have I really never mentioned the subsidy deal that Charlotte entered into in order to become home of the NASCAR Hall of Fame? Well, better late than never, so how’s that working out, anyway?

As it turns out, the $192 million Nascar Hall of Fame, with vintage cars dating to the 1940s, is drawing fewer than half the visitors forecast when it opened in 2010, leading officials last month to use $5 million of public funds to settle bank loans. The move is raising questions about how North Carolina’s largest city has financed economic development.

Alrighty then!

Here’s how the deal went down: Charlotte sold $137 million in bonds in 2009 to help pay for the monument to fiery death, to be repaid by a 2 percent tax on hotel and motel rooms. Unfortunately, the Charlotte Regional Visitors Authority also agreed to run the place, and instead of bringing in lots of new visitors, it’s been losing money hand over fist, making necessary last month’s bailout.

Bloomberg News draws the obvious conclusion, which is that sports and tourist enterprises are risky investments for cities, but there’s another lesson as well, which is: Keep your eye not only on the up front costs, but on the operating expenses. Handing over hotel/motel tax money for a venture like this was bad enough, but agreeing to cover operating losses was just doubling down on the risk. I know that tourism bureaus think it’s their job to throw money at crazy ideas in hopes that people from all over will come to town and lavish the local economy with out-of-town currency, but shouldn’t somebody be thinking this through more than “We have the money, we might as well spend it on something, what the hell, let’s see if this works?”

“The $5 million isn’t money that can pay for streets or anything else,” [city councilmember Vi] Lyle said. “It’s paid by people who stayed in our hotels.”

Apparently not. Carry on!

No, community benefits agreements aren’t the solution to stadium subsidies

Here’s British journalist Ian Betteridge explaining his eponymous law of headlines:

Any headline which ends in a question mark can be answered by the word “no.” The reason why journalists use that style of headline is that they know the story is probably bullshit, and don’t actually have the sources and facts to back it up, but still want to run it.

So when Deadspin runs an article asking, “Has Detroit Found An Answer To The Publicly Financed Stadium Scam?” you should probably approach it with a grain of salt. But for the record, allow me to answer Deadspin’s question:

No.

What the Detroit city council is considering is a law to require community benefits agreements for all development projects. CBAs, as they’re known, are agreements that developers negotiate with local residents, community groups, and other stakeholders committing to jobs and other local benefits as part of a project; as state assemblyperson Rashida Tlaib told Deadspin, “We are allowing these large corporations—companies that could build a hockey arena without our money—to get in the corporate welfare line and take resources away from us. In exchange for what?”

In theory, CBAs sound great: If developers want public money, they have to give the public something in return! In practice, they’re more problematic. While everyone loves to point to the CBA for development around the Staples Center in L.A., which got parks and job training for local residents impacted by the new construction, there are far more CBAs that haven’t worked out as well: The one the New York Yankees set up, for example, which arranged for a “charity” that handed out benefits to several groups that barely existed, and which didn’t bother to keep track of how many Bronx residents were hired at the new stadium. There’s also the problem of how the “community” is defined: then-New Jersey Nets owner Bruce Ratner famously paid to set up community groups that he could then negotiate a CBA with, over the objections of much of the rest of the community.

And even when CBAs are legit, more or less, there’s still the problem that they’re less a referendum on whether pumping public money into a development project is good for a city as a whole, and more a way for community members to demand a cut of the boodle. Which isn’t necessarily a bad thing — as Tlaib implies, at least if you’re shelling out all that money, you might as well demand something in return — but it can end up being just an easily applied fig leaf for developers, and an incentive for community groups to trade their support for what amounts to a cash payoff, rather than keeping the broader public interest in mind.

So, points to Deadspin for covering this, but more points off for a misleading clickbaity headline. Developers may hate the mandatory-CBA plan — developers hate mandatory-anything plans — but that doesn’t necessarily make it a good thing.

Credit card company issues lame-ass report on Super Bowl spending, gets name in headlines (but not this one)

First Data, which processes credit and debit card payments, has put out a press release about spending at last Sunday’s Super Bowl in Glendale, and Darren Rovell is ON IT:

Super Bowl XLIX in Glendale, Arizona, resulted in no significant consumer spending growth to the greater Phoenix area, according to an analysis of consumer spending patterns from payments technology company First Data, which says it annually handles 60 billion credit and debit card transactions.

The company’s data shows spending growth from the two weeks surrounding last Sunday’s game was only 3.1 percent better than average compared to the same time period a year before when the spending in the area grew 6.4 percent.

This is along the lines of what actual economic studies have found, so it’s tempting to take this as confirmation that the Super Bowl doesn’t do squat for local spending, because it mostly just displaces visitors who steer clear of town because they don’t want the hassle of dealing with the Super Bowl. First Data, though, didn’t exactly do an exhaustive study: It only looked at credit card and debit card charges, obviously, and just compared spending in the Phoenix area to the same time period the year before without controlling for any other factors. In other words, this could be an actual sign of something, or it could just be a random fluctuation that means zippo.

Also, Rovell doesn’t bother to calculate what a 3.1% hike in spending (compared to “average” — average over the whole year, average for February, what?) means in actual dollars, though presumably he has the First Data report (he didn’t link to it) and a calculator. But, you know, ESPN isn’t paying him to think, just to reprint press releases, and there’s another one on the pile, so no time to lose!

Obama proposes killing 29-year-old stadium bond loophole that’s cost U.S. taxpayers $4 billion

This is potentially huge, except it’s an Obama budget proposal and so will never get through this Congress, but still: Obama’s 2015 budget includes a provision that would change the rules for how tax-exempt bonds are issued that would, once and for all, eliminate the loophole that has allowed sports stadiums to get a giant federal tax break for nearly 30 years.

How it works: The 1986 Tax Reform Act introduced a provision limiting the use of tax-exempt bonds — which are cheaper for cities to pay off because bond buyers don’t have to pay taxes on their earnings, and so are willing to accept lower interest rates — to bonds being sold for public uses: think parks and libraries, anything that doesn’t actually bring in enough revenue to pay for construction costs. Eligibility was determined by a two-fold “private activity” test: If a project was going to be used more than 10% of the time for private uses, and more than 10% of the cost was going to be paid off by means other than “generally applicable taxes” (i.e., any kind of special payments, whether called taxes or not), then tax-exempt bonds were disallowed.

Since stadiums and arenas are almost by definition used for private events more than 10% of the time, sports team owners immediately made sure that they wouldn’t get caught in this trap by focusing on the other test, and ensuring that at least 90% of bond costs would be paid off by generally applicable taxes. This required jumping through some fancy hoops at times — sometimes dividing up bond issuances into one publicly paid tax-exempt set and one privately paid taxable set, sometimes pretending that private rent payments are really tax payments and convincing the IRS to go along with it — but has consistently worked out over the years, so far costing taxpayers $4 billion in foregone tax revenue.

The Obama proposal would slam the loophole shut by getting rid of the generally applicable tax test altogether, and simply ruling that any building used more than 10% by a private entity is a private use, and no tax-exempt bonds for you. This, as bond expert Dennis Zimmerman (who testified before Congress in 2007 about the tax-exempt bond problem, alongside me, Heywood Sanders, and others) told ThinkProgress’s Travis Waldron, is an ideal way to eliminate this loophole:

“Perfect. You couldn’t do it any better if you believe like I do that we should not finance these things with tax-exempt debt,” said Dennis Zimmerman, a retired economist who worked for the Congressional Research Service and Congressional Budget Office and now serves as the director of projects for the American Tax Policy Institute. In a 1996 paper for CRS and in other publications, Zimmerman examined the tax exemption on government bonds used for sports facilities and recommended eliminating it….

“Cities can still pay for stadiums,” Zimmerman said. “But there would be no federal subsidy paying part of the interest cost. That’s what’s at stake here: it’s will the federal government pay a share of the interest costs?”

The new rules would go into effect for any bonds issued after the end of this year, which the White House estimates would save the government about $54 million a year, though how they know how many stadium bonds are going to be issued in future years is anybody’s guess. In any event, there’s a good chance that Congressional Republicans will kill this provision in budget talks — though some Republicans have reportedly been willing to rein in tax-exempt bonds in the past, so you never know.

If Congress ever does agree to close the tax-exempt bond loophole, of course, it wouldn’t stop cities from funding stadiums — but it would make it more expensive, hopefully causing local elected officials to require private owners to carry more of the debt burden. (It would also eliminate the incentive for governments to finance bigger shares of stadium debt, in order to get under that 10% private-funding cap.) Of course, it’s always possible that cities would just respond by covering the extra interest payments out of their own pockets, but one battle at a time.

Anyway, go read Waldron’s article, which is excellent. And then make a note to closely follow any upcoming budget reconciliation talks. Like you weren’t already, right.

Boston mayor pledges no eminent domain for Olympic stadium

Boston Mayor Marty Walsh has promised he won’t use eminent domain to seize land for a potential Olympic stadium in Widett Circle in South Boston, which means it probably won’t get built there, seeing as that there a bunch of local businesses there that don’t want to move. Assuming Boston actually gets the 2024 Olympics, that is, which is still probably a longshot — the city’s bid could, in fact, come to an end as early as November, if opponents manage to get a promised referendum on the ballot to withdraw the bid. Other cities have recently had to withdraw Olympic bids after losing public votes; latest polls show 50% of Bostonians approving the bid, 33% opposed, and 17% undecided.

Or, it could all go through, and the Olympic committee could just win the proposed stadium land by throwing enough money at landholders to make it an offer they couldn’t refuse. Which could include public money. Which probably wouldn’t help Olympic advocates in any referendum battle.

Vegas stadium foes fall short in petition drive, file suit over signature count switcheroo

Opponents of Las Vegas’s deal to give $122 million to developers of an MLS-ready soccer stadium fell short in their petition drive to get a ballot referendum to repeal the plan, getting only about 7,000 verified signatures toward the 8,258 the city determined was needed. So now they plan to go to court over that 8,258 number, since it wasn’t announced until weeks after they’d begun gathering signatures:

Judge Jerry Wiese is set to hear a lawsuit filed by opponents of the $200 million stadium’s financing plan on Feb. 4.

That suit, filed by councilman and staunch foe of the stadium subsidy Bob Beers on Friday, seeks to knock some 6,000 signatures off the number City Hall says is needed to win a spot on the ballot.

An apparent error in the city clerk’s office saw subsidy opponents scramble to come up with around four times the roughly 2,300 signatures city officials first thought would be needed to put the issue to voters.

The dispute is over whether the number of signatures needed is a percentage of the votes cast in the last municipal election, or in the last municipal or county election — if you really want to read about it, you can do so here. Or you can just wait till Wednesday to see what the judge says.

 

Hey, look, another Milwaukee team is threatening to move if it doesn’t get arena subsidies

The Bucks aren’t the only pro sports team obliquely threatening to leave Milwaukee if they don’t get a new arena deal. The owner of the Milwaukee Wave indoor soccer team says he wants a revised lease at the UW-Milwaukee Panther Arena, because he’s losing money on the team he bought last year:

“I complained to them,” [Mike] Zimmerman said of Wisconsin Center District officials. “What it takes to pull off this production — we’re not making any money.”

Given that the Wave was averaging 3,500 attendance the year before last, and many of those tickets were giveaways, you have to wonder why Zimmerman thought the team would do anything but lose money under his ownership. Still, he seems to figure the best way to handle his red ink is to complain to his public landlord that he has to pay rent. And also that somebody else has the concession contract at the arena, because “the biggest thing for me is if I can get a handle around the food and beverage [concession] in part or in whole.”

This is a Rich Kirchen article, so don’t expect it to get into the question of why on earth the state-created arena district would want to subsidize the losses of an indoor soccer team that can’t draw flies. He does cite Wisconsin Center District finance director Jeff Sinkovec as saying that the arena’s rent charges, which include an extra $2,500 for games that sell fewer than 2,500 tickets, are necessary to keep the arena from losing money: “It costs us more than $5,600 to put on a [Wave] game. If they sell under 2,500 [tickets], it doesn’t cover our costs.” But as to whether, if Zimmerman really wants lease breaks, the arena would be better off just letting the team move somewhere and filling those dates with something that can sell a few more tickets — or even just not spending the money to open the doors on those nights — you’ll have to use your imagination.