This is an archived version of a Field of Schemes article. Comments on this page are closed. To find the current version of the article with updated comments, click here.
July 23, 2009
California budget to boost stadium TIFs?
The California budget deal — otherwise known as the great experiment in whether conservatives are right that we don't really need Medicare or public schools — could have an unexpected effect on stadium deals, with a provision being voted on as soon as today that would extend the life of redevelopment areas for up to 40 years. "It prevents the cuts to local government from occurring," Senate Republican leader Dennis Hollingsworth boasted of his measure.
Um, no. Redevelopment areas use tax-increment financing, or TIFs: They don't actually generate new revenue, but rather redirect new property taxes to local governments (or, more commonly, to developers promising to build projects that will hike local property tax receipts). Needless to say, this revenue shuffle has proven popular with stadium boosters, despite a compelling pile of evidence that TIFs only end up making Swiss cheese of your local tax base.
The reason the state is pushing this plan, in any case, is because as part of the deal, the state would get to siphon off 10% of future TIF revenues, and borrow against that revenue now, helping close the state's current budget hole at the expense of future state budgets. It's a common theme to the budget deal: As our old friend Stanford economist Roger Noll told U.S. News and World Report: "In the short run it gets us through this year, and in the long run the same problem comes back even worse next year because $10 billion worth of gimmicks has been used that cannot be replicated."
But enough about budgets; what does this mean for stadiums? According to the L.A. Times, it would allow the City of Industry to siphon off "hundreds of millions" of dollars in coming years for infrastructure to support Ed Roski's planned NFL stadium; it would also presumably aid teams like the San Francisco 49ers and Oakland Athletics in their stadium plans, as both teams have previously mulled TIF funding as a revenue source. Roski and his company, notes the Times, have contributed more than $1.2 million in the last six years to state politicians; when the vote comes up, we'll see if his money was well spent.
Actually, on TV last night here in Santa Clara and the SF Bay Area there was a report on how the state of CA wants to take away millions of dollars in RDA funds from cities, including Santa Clara, which means that we will not have RDA funds to use as bond collateral. If that happens, the 49ers have offered to LOAN Santa Clara the money to cover our RDA funds grabbed by the state. As our assistant city manager said though, we have no way to pay back the loan. Here's the video:
http://abclocal.go.com/kgo/story?section=news/local/south_bay&id=6928656
If we can't even afford to pay back a 12 million dollar loan, then what are we doing planning on taking on 330 million in bond debt on top of a 114 million dollar direct subsidy? Public money should be for public needs.
Posted by Chris on July 23, 2009 05:22 PM
Have to agree Chris. If the Niners want a stadium the closest to public financing they should be coming is TIF. Direct subsidies and questionable bonds should not be used, particularly now.
Posted by Dan on July 23, 2009 08:19 PM
Dan, If you want to help, there will be a booth at the Santa Clara Art and Wine Festival (something like Sept 17,18,19 at Central Park). Please stop by. There are several organizations that have sprung up:
www.notwithmymoney.com (or org) and
www.santaclaraplaysfair.com (or org).
We have a grassroots effort to go up against the 49er p.r. machine, which believe me, will throw lots of money into glossy, slick, misleading mailers ahead of the vote. Also, if you want to email me directly, write back here and I will ask Neil to forward my email address to you. I'm helping in lots of ways with this effort to get the information out about how Santa Clara's finances will be affected in the future. A longtime resident told me that 20 years ago, the Giants tried to do the same thing the 49ers are trying, and through the efforts of regular citizens getting out information, including walking their neighborhoods talking to people, the Giants were kept from getting a public subsidy. This also worked when a card room wanted to come in to Santa Clara, so individual effort has a substantial impact. Let me know if you want to get involved.
The sky is falling...the sky is falling---Go '9ers--can't wait to see the first game in Santa Clara in 2014!!!
Posted by SanJoseA's on July 23, 2009 11:46 PM
Let's Go Oakland! is a group of A's fans, business people, labor leaders, and government officials who are committed to keeping the A's in Oakland.
But it's about much more than just building a ballpark. As part of a larger plan to build new hotels, restaurants, and cafes, a new destination stadium will attract visitors from all over the region. Like AT&T Park in Mission Bay did for San Francisco, our ballpark will be a catalyst to bring new investment and jobs to Oakland, kick-starting the next phase of our community's successful economic development.
If you support Oakland -- if you support the A's -- we hope you'll stand with us. Sign our petition, and urge Major League Baseball and team ownership to keep the A's in Oakland!
http://www.letsgooakland.com/
Posted by OAKLANDathletics on July 24, 2009 12:40 AM
Um, what does that last comment have to do with the Niners?
Posted by Dan on July 24, 2009 10:59 AM
Presumably, the TIF would direct property tax money in Oakland that could be used for a stadium project for the A's (Neil mentions the Oakland A's in his article above). But, with Oakland carrying a 100,000 million dollar budget deficit right now, 20 million per year of which comes from Coliseum debt, and after the people of Oakland were promised the Raider's deal would not cost them anything, I doubt if a new stadium for the A's would fly right now.
Posted by Chris on July 24, 2009 01:26 PM
TIFS are a total and complete SCAM. Mayor Daley in Chicago has rammed through the city council (which is a rubber-stamp) TIF districts throughout Chicago...developers friendly to Daley get the money to develop areas that do not even need development, while the school system in those areas goes down the tubes, thanks to property tax funds being siphoned off for the TIF.
Posted by Daniel M on July 27, 2009 12:09 PM
Neil, sorry I missed you in NYC. We had a great trip.
Here's another plan that wants to use TIFs: The redevelopment of Cal Expo...
http://www.sacbee.com/arena/story/2052052.html
It's juuuuust out of reach, but if you take out the TIFs, the very small number of developers that expressed lukewarm interest suddenly run away, laughing. Gee, I wonder why.
Posted by MikeM on July 28, 2009 05:25 PM