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November 15, 2006
A's to seek tax-increment financing?
Hidden in the midst of long article in the San Francisco Chronicle about how the Oakland A's are about to become the "San Jose A's of Fremont" - a suggestion that, it's worth noting, made Bud Selig's already-sour look even more sour at yesterday's press conference - was this tidbit from the A's press release about the stadium:
The public assistance sought will be in the form of processing the development activity in the most efficient manner possible, the agreement that benefits generated solely by the development will in part or in total be used to facilitate the development program in a manner that will not impose on general fund or bonding issues or local government and other aspects of public-private cooperation that will stand the test of public acceptance.
If that middle section - "benefits generated solely by the development will in part or in total be used to facilitate the development program" - isn't code for a TIF, I'll eat my hat.
A TIF, you'll recall, short for "tax-increment financing," is when a city kicks back all new property tax (and sometimes sales tax) revenue generated by a project to the project's developer, under the theory that "if it didn't get built, we wouldn't have it anyway." It's a line of reasoning that ignores the fact that property taxes are used to pay for services - say, the roads, schools, fire and police protection, etc., needed to support a stadium and condo complex. (TIFs were previously proposed for the New York Jets' Manhattan stadium project, among other things.) Add in the fact that the city gives up the possibility of the land being developed by someone who'll actually pay their taxes, and little wonder that TIFs have been criticized as corporate subsidies by another name.
In my Baseball Prospectus article today, I posed the question of whether the A's stadium would turn out to be "an innovative way to fund a new stadium without draining the public purse" or "an epic land dodge to increase the value of a piece of worthless property by using a ballclub as the bait." The Vegas odds now favor the latter.
From an earlier article:
Lew Wolff has said he would fund part of the expected ballpark's expected $400 million or more price tag through profits that would be created if the city agrees to convert Cisco's industrial-zoned land to housing uses. He gave no details of that plan to council members Wednesday, but in a September discussion with the Mercury News editorial board, he suggested those profits would be given to the city, with the understanding the city would become an investor in the ballpark.
As outlined by Wolff, the city would "reinvest the money in a ballpark, provided you guys build it, you guys take care of any overruns, and you guys run it with no obligation on our part for operational deficits."
"The city can continue to have the ownership, or the percentage they put into it," he said. "If they put in" $200 million "and we put in 200, it's 50-50."
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The "you guys" in the article refers to the A's. So the profits from the housing sale would be given to the city to reinvest into the stadium. Perhaps that's in exchange for some level of infrastructure investment by the city, but we simply don't know at this point.
