Friday roundup: A’s pollution woes, Falcons roof woes, Hansen email woes, and more!

Whole lot of news leftovers this week, so let’s get right to it:

  • It’s not certain yet how serious the environmental cleanup issues at the Oakland A’s proposed Peralta Community College stadium site are, but anytime you have the phrases “the amount of hazardous materials in the ground is unclear” and “two possible groundwater plumes impacted by carcinogens” in one article, that’s not a good sign. Meanwhile, local residents are concerned about gentrification and traffic and all the other things that local residents would be concerned about.
  • There’s another new poll in Calgary, and this time it’s Naheed Nenshi who’s leading Bill Smith by double digits, instead of the other way around. This poll’s methodology is even dodgier than the last one — it was of people who signed up for an online survey — so pretty much all we can say definitely at this point is no one knows. Though it does seem pretty clear from yet another poll that whoever Calgarians are voting for on Monday, it won’t be because of their position on a Flames arena.
  • The Atlanta Falcons‘ retractable roof won’t be retracting this season, and may even not be ready for the start of next season. These things are hard, man.
  • Nevada is preparing to sell $200 million in bonds (to be repaid by a state gas tax) to fund highway improvements for the new Las Vegas Raiders stadium, though Gov. Brian Sandoval says the state would have to make the improvements anyway. Eventually. But then he said, “I just don’t want us to do work that has to be undone,” so your guess is as good as mine here.
  • Pawtucket is preparing to scrape off future increases in property tax receipts for a 60- to 70-acre swath of downtown and hand them over to the Pawtucket Red Sox for a new stadium, an amount they expect to total at least $890,000 a year. Because downtown Pawtucket would never grow without a new baseball stadium, and there’s no chance of a shortfall that would cause Pawtucket to dip into its general fund, and nobody should think too hard about whether if minor-league baseball stadiums are really so great for development, this wouldn’t mean that property tax revenues should be expected to fall in the part of the city that the PawSox would be abandoning. Really, it’ll all be cool, man, you’ll see.
  • Somebody asked Tim Leiweke what he thinks of building a new stadium for the Tampa Bay Rays for some reason, and given that he’s a guy that is in the business of building new stadiums, it’s unsurprising that he thinks it’s a great idea. Though I am somewhat surprised that he employed the phrase “Every snowbird in Canada will want to watch the Toronto Blue Jays when they come and play,” given that having to depend on fans of road teams to fill the seats is already kind of a problem.
  • The study showing that spending $30 million in city money on a $30-million-or-so Louisville City F.C. stadium would pay off for the city turns out to have been funded by the soccer team, and city councilmembers are not happy. “There’s something there that someone doesn’t want us to find,” said councilmember Kevin Kramer. “I just don’t know what it is.” And College of the Holy Cross economics professor Victor Matheson chimed in, “I expect for-profit sports team owners to generate absurdly high economic estimate numbers in order to con gullible city council members into granting subsidies.” I don’t know where you could possibly be getting that idea, Victor!
  • Congress is considering a bill to eliminate the use of federally tax-exempt bonds for sports facilities, and … oh, wait, it’s the same bill that Cory Booker and James Lankford introduced back in June, and which hasn’t gotten a committee hearing yet in either the House or the Senate. It has four sponsors in the House, though, and two in the Senate, so only 263 more votes to go!
  • A Miami-Dade judge has dismissed a lawsuit charging that the sale of public land to David Beckham’s MLS franchise illegally evaded competitive bidding laws, then immediately suggested that the case will really be decided on appeal: “I found this to be an extremely challenging decision. Brighter minds than me will tell me whether I was right or wrong.” MLS maybe should be having backup plans for a different expansion franchise starting next season, just a thought.
  • The New York Times real estate section is doing what it does best, declaring the new Milwaukee Bucks arena to be “a pivotal point for a city that has struggled with a decline in industrial activity,” because cranes, dammit, okay? Maybe somebody should have called over to the Times sports section to fact-check this?
  • And last but not least, Chris Hansen is now saying that his SoDo arena plan missed a chance at reconsideration by the Seattle city council because the council’s emails requesting additional information got caught in his spam filter or something. If that’s not a sign that it’s time to knock off for the weekend, I don’t know what is.

Trump scares NFL with tax break threat, but will he do anything real about sports subsidies?

So Donald Trump’s tweet yesterday threatening to eliminate the NFL’s “massive tax breaks” got an immediate response from league commissioner Roger Goodell, who issued a press statement that of course the league believes that “everyone should stand for the national anthem,” and will get right on figuring out how to make players do that without violating collective bargaining laws. The lesson: Sanctions work!

Trump hasn’t yet responded to Goodell’s letter, but one has to figure he’ll probably call off the tax break attack dogs now that they’ve achieved what he unleashed them for. Which would be a shame, as I note in an op-ed today for the Washington Post website, because if the president really wanted to rein in public subsidies for pro sports, there’s plenty he could do:

The use of tax-exempt bonds for sports stadiums is a problem that goes back to a time when Trump was still a USFL owner suing the NFL. The practice, which effectively provides sports franchises with low-interest loans at the expense of the federal treasury, has cost taxpayers an estimated $3.2 billion across all pro sports since the turn of the millennium…

And that stadium tax break — if it was what Trump was getting at (even his own press secretary seemed unclear which public money he was talking about) — is only the tip of the sports-subsidy iceberg. Even at $200 million a year, the public cost of tax-exempt bonds is dwarfed by the flood of cash flowing from state, county and city governments to sports teams.

Please go read it now. There’s a good bit at the end with David Minge in it.

Trump says kill NFL’s “massive tax breaks” so long as players are protesting

Somewhere, somebody is waking up from a coma and is so desperately confused by this:

WASHINGTON (Reuters) – President Donald Trump on Tuesday called for changes to U.S. tax law affecting the National Football League, fueling a feud with the league and its players over protests that he says disrespect the nation.

Here’s the tweet in question, for the record:

So that probably means the tax breaks that come along with tax-exempt stadium bonds, which several other Republicans have proposed rescinding for the NFL if their players keep taking a knee during the national anthem. (A state representative in Missouri has also called for “not investing any more money for stadium funding if the players and billionaire owners are going to disrespect our country and disrespect our state,” which I guess means not paying to renovate the Kansas City Chiefs‘ stadium again?) As is typical with Trump, there are no specifics about what he means, though I suppose I could try tweeting at him to ask if he knows a way to change tax law so that the NFL can’t get tax-exempt bonds but more patriotic sports like, er, hockey can.

Anyway, let’s all enjoy the spectacle of Trump and the GOP rushing to embrace a policy that President Obama proposed two years ago, only to be blocked by a Republican-controlled Congress, because they’re mad at players for not standing on the field during the anthem, defying a tradition that dates all the way back to 2009. I remain extremely skeptical that this will lead to any actual legislation, but the universe is so insane right now, anything is possible.

Conservatives threaten to yank NFL stadium tax breaks if players keep making the flag cry

So the continuing uproar over how many feet athletes have to have on the ground during the national anthem rages on, with many conservatives especially rageful at the NFL, where there have been widespread instances of players taking a knee or linking arms or staying in the locker room (though other sports teams are doing these things too). And in that strange zone where libertarianish economic principles and blinkered patriotism meet, there have been increasing calls for football to be punished by having its public stadium subsidies taken away, or at least some of them:

  • Louisiana state Rep. Kenny Havard proposed cutting off state lease subsidies to the New Orleans Saints, which amount to somewhere between $200 million and $400 million over 15 years depending on how you count, on the grounds that “It is time for taxpayers to quit subsidizing protest on big boy playgrounds.” How he planned to do that in a contractual agreement signed four years ago, Havard didn’t say.
  • U.S. Rep. Matt Gaetz (R-FL) declared, “In America, if you want to play sports you’re free to do so. If you want to protest, you’re free to do so. But you should do so on your own time and on your own dime.” Gaetz went on to gripe about the NFL’s non-profit status, which the league already gave up two years ago, though he also noted that “the public pays 70 percent of the cost of NFL stadiums,” which while true wouldn’t actually be affected by any actual legislation Gaetz was proposing.
  • The Daily Signal, which is extremely in favor of “free speech” when it comes to people being guaranteed the right to write conservative student newspaper columns without fear of getting angry emails from readers, noted that upset over anthem protests may “open the eyes of the public to a serious and generally unchecked issue: billionaire NFL owners sponging enormous amounts of money from taxpayers through crony capitalist schemes.” The site then provided a useful list of stats about NFL owner sponging (“$7 billion of taxpayer money” over the last two decades, which it looks like they got from Judith Grant Long’s data via this Huffington Post article), concluding with mention of the bipartisan Lankford-Booker bill to eliminate use of tax-exempt bonds for sports venues, which it said would “strip federal funding from sports teams,” which isn’t exactly right, though it would strip the largest federal subsidy.

If anger at players for calling attention to police violence and institutional racism via silent protests leads to new attention to and limits on sports stadium subsidies, that’d be good, I suppose, albeit weird: For one thing, NFL players don’t really benefit from public subsidies except indirectly (team owners get more profits, and use some of that to spend on higher player salaries). And the Lankford-Booker bill on tax-exempt bonds does seem like the most likely restriction on stadium subsidies to have a shot at passage — nobody that I can tell is talking about reviving David Minge’s bill for an excise tax on local-level subsidies, which would actually do something serious about that $7-billion-and-growing nut.

Mostly, though, this sounds like a bunch of politicians taking advantage of public anger at football players and at sports subsidies to mash the two up into, “Yeah, let’s hit them where it hurts, see!”, even if there isn’t an exact plan for how to do so. The Lankford-Booker bill still has zero other cosponsors and remains sittin’ in committee; maybe we’ll now see a rush of Congressfolk signing on if the kneeling continues on Sunday, but I’m honestly not holding my breath.

Bill to outlaw tax-exempt stadium bonds still wouldn’t end all subsidies, c’mon Darren Rovell

Oh, Darren!!!

Darren Rovell, ESPN Senior Writer

A group of politicians who are tired of taxpayer money being used to build sports stadiums on Tuesday will introduce a bill in the Senate to prohibit the practice.

Darren, Darren, Darren. You know that’s not what the bill would do. You say it in your very next paragraph: “Cory Booker, D-N.J., and James Lankford, R-Okla., are sponsoring a bill that would prohibit teams from using municipal bonds, whose interest is exempt from federal taxes, to help finance stadium construction.” (Actually only tax-free municipal bonds, but close enough.) So why do you perpetuate the myth that ending the use of tax-exempt bonds for stadiums would stop all sports subsidies, any more than it did when President Obama tried it two years ago?

If you want a good writeup of what the Booker-Lankford bill does and doesn’t mean, hie thee to Vice Sports, where my friend/editor (freditor?) Patrick Hruby lays it all out for you, including:

  • The $3.7 billion that the Brookings Institution calculates tax-exempt stadium bonds has cost the federal government since 2000. (Darren has this at $3.2 billion, which is what’s in Booker’s press release, but that’s just the amount of benefits that stadiums have received; $3.7 billion is the amount it’s cost taxpayers because some of the money just ends up in the pockets of bond buyers.)
  • This has been proposed before and gone nowhere, and it’s likely to fail again (though bipartisan sponsorship is nice, I guess).
  • “Booker and Lankford acknowledge that their bill won’t prevent localities and states from smashing the public piggy bank to pay for sports stadiums; in fact, they all but brag that local governments will be allowed to finance future stadium subsidies with ticket and in-stadium purchase taxes.” This is an apparent reference to a clause that would allow using targeted sales taxes on in-stadium purchases to pay off stadium costs, which Booker and Lankford seem to think they can’t do now — or maybe it would just allow cities to use targeted sales taxes to pay off tax-exempt bonds, which indeed they can’t do now thanks to the “generally applicable taxes” test. Except that if tax-exempt bonds can’t be used for stadiums at all anymore … clearly I need to find and read the actual legislation.

For more on the history of tax-exempt stadium bond ruless and how they became a money pit for federal taxpayers despite being intended to do the exact opposite, see my Vice Sports article from two years back. And while you’re reading up, check out Hruby’s article from last week on the “Death Star” federal tax proposal that would actually shut down stadium subsidies once and for all, if only anybody would seriously consider it.

Tax-free stadium bonds cost U.S. taxpayers $3.7B since 2000 for no damn reason, says study

It’s been public knowledge for decades that the federal government spends billions of dollars subsidizing private sports stadiums through tax-free bonds for no good reason: Sen. Daniel Patrick Moynihan tried (and failed) to address it in 1986 through the Tax Reform Act and again ten years later, Congress has held hearings about it where myself and others testified, and President Obama has proposed eliminating the tax-exempt bond loophole in his annual budget.

Still, that’s not the same as a major think tank actually itemizing the cost to U.S. taxpayers of allowing tax-exempt bonds to be used for sports facilities: $3.7 billion since 2000, according to a new Brookings Institution study (full PDF here).

All together, the federal government has subsidized newly constructed or majorly renovated professional sports stadiums to the tune of $3.2 billion federal taxpayer dollars since 2000. But because high-income bond holders receive a windfall gain for holding municipal bonds, the resulting loss in total revenue to the federal government is even larger at $3.7 billion.

Those two numbers require a little explanation. When a stadium or arena is built with tax-exempt bonds, the bondholders don’t pay taxes (duh) on the bond payments. That means that they’ll accept a lower interest rate, so stadium builders get to save money on construction financing — about $3.2 billion worth over the past 16 years. But stadium builders can’t precisely enough calibrate interest rates to extract all that savings for themselves, so bondholders end up getting part of the windfall as well — about $500 million since 2000.

That $3.7 billion number is a whopping big figure, but the Brookings report goes on to itemize the cost for every sports facility built in the U.S. since the turn of the millennium:

screen-shot-2016-09-09-at-8-09-21-amSomebody at Brookings clearly understands how the media works, because a chart like this is crack for local journalists looking for a good news hook. Already this morning there have been stories in the Denver Post on the Broncos‘ federal subsidy (“shortchanged federal tax collectors by $54 million”), in the Pittsburgh Post-Gazette on that city’s three new venues (“The Penguins received the second biggest subsidy among National Hockey League teams, topped only by the New York Islanders at $122 million”), and in the San Diego Union-Tribune on the Padres‘ federal subsidy, and that’s just what Google alerted me to when I woke up.

Moreover, the study makes clear, these tax breaks have been provided for no real reason at all: Unlike local-level subsidies, which are dumb but at least if you squint can be seen as keeping the team in town or boosting the local economy a smidge or something, federal stadium subsidies don’t benefit the U.S. as a whole even one iota.

Decades of academic studies consistently find no discernible positive relationship between sports facilities and local economic development, income growth, or job creation. And local benefits aside, there is clearly no economic justification for federal subsidies for sports stadiums. Residents of, say, Wyoming, Maine, or Alaska have nothing to gain from the Washington-area football team’s decision to locate in Virginia, Maryland, or the District of Columbia.

Whether all this attention results in anything being done about the situation is another story: When Moynihan tried to pass a bill in the ’90s to rein in federal stadium subsidies, the New York Times reported that he’d been forced to “retreat under a hail of lobbying fire,” and matters aren’t likely to be much different today. (Obama’s budget plan to do the same thing never got seriously considered in Congress.) I’d like to say that maybe there’s a chance for change if the Democrats retake both houses of Congress in January — after all, their putative leader for the last eight years has declared that this is something that needs reform — but given sports leagues’ lobbying power with both parties, I’m not holding my breath. Still, drops of water turn a mill, right? Maybe one of these decades…

Why Obama’s bond rules won’t stop stadium subsidies, and what he could do that would

If you were wanting more explanation of why President Obama’s plan to eliminate tax-exempt bonds for stadium projects won’t be close to enough to end stadium subsidies entirely, beyond what I wrote here on Tuesday, you’re welcome to read my longer piece at Vice Sports yesterday, which explains not just why … that thing I just wrote earlier in this sentence, but what options Washington has that could actually shut down taxpayer stadium giveaways. (No, I’m not going to tell you here, that would be a spoiler. Go click on it. Really, now. Please?)

Obama’s bond rules could slow stadium subsidies down, but it’s not going to stop them

So USA Today ran an article yesterday about the Obama plan to outlaw the use of tax-exempt bonds for sports stadiums, the proposal that was floated back in early February and covered here (and elsewhere) then. The article blew up all over social media, though, and you know how come? Clickbaity headlines, that’s how come:

Is Obama proposal the end of taxpayer-subsidized sports stadiums?

The answer: NO. Ian Betteridge, come collect your royalty check.

I’m not going to go over this all again (click the second link above for the full story), but the basics of this are: The Obama plan, which faces uncertain at best passage in a Republican Congress, would force sports team owners to use taxable bonds for stadium projects, rather than having cities sell federally tax-exempt bonds. This would close a major loophole that’s been allowing teams and cities to push off a portion of stadium costs onto the federal government — no more Red Sox fans having to help subsidize a new stadium for the Yankees! — and save the feds a few hundred million dollars in coming years. But taxable bonds work just as well for stadiums as tax-exempt ones; they’re just more expensive (by about a point and a half of interest, if I remember right), meaning teams and cities would just need to figure out how to raise more money to pay them off.

Now, is it possible that once federal subsidies are no longer available, more cities and teams will look at stadium and arena price tags and go, “Hell with that, let’s just stay in the old place”? Sure, maybe. But the Obama plan would be at best a moderate speed bump to stadium subsidies, not an actual roadblock.

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.

Tax-exempt bonds again on the chopping block?

There’s more talk again today that Congress may get rid of tax-exempt municipal bonds, which are one of the main subsidies that the government provides to not just sports stadiums but all local development projects. (Short version: The IRS doesn’t collect income tax on money earned by bondholders, allowing them to accept lower interest rates, allowing cities to borrow money to build stuff for cheaper than they would otherwise.) This time it’s the Tampa Tribune speculating that the federal government may get rid of the tax exemption during upcoming debt ceiling talks, but it’s a topic that been kicking around elsewhere of late, as apparently nothing is off the table when it comes to filling the budget gap that Washington is suddenly obsessed over.

This would almost certainly be a good thing all around, as tax-exempt bonds have been abused for decades as a way for local governments to fob off costs to federal taxpayers, not just for genuine public projects but for private entities like sports teams. (Stadiums were supposed to be exempted by the 1986 Tax Reform Act, but sports teams found a way around it. A bunch of ways, actually.) If the feds really want to help local governments build parks and libraries, they can just give them cash; tax-exempt bonds are a backdoor way of doing the same thing that’s ripe for abuses, especially since it obscures the subsidy and makes it harder for the public to see what’s actually getting taxpayer dollars.

It’s still pretty unlikely that anything will change — we heard this same talk before the fiscal cliff negotiations, after all, and nothing came of it. And lobbyists for bond companies and local governments alike are already gearing up to fight any attempt to eliminate or reduce the tax break. Still, if something does happen, it would dramatically increase the cost of sports facilities and shake up current construction plans across the nation, so it’s worth keeping an eye on.