This is an archived version of a Field of Schemes article.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.
November 23, 2011
Miami could be on hook for Marlins garage property taxes
I'll just let the Miami Herald's Andres Viglucci and Patricia Mazzei tell this one, because they do it so well:
When the city of Miami agreed to build parking garages for the new Miami Marlins stadium, borrowing $100 million in the bond market to do so, officials assumed the structures, like most such municipal facilities, would be exempt from property taxes.
Yes, apparently Miami officials forgot to check with Miami-Dade County tax assessors before assuming that the garages would be tax-free just because the city will own them. Because the garages will be entirely leased to the Marlins — at $10 a spot per event, with the team allowed to charge whatever it wants for the spaces — it's considered a commercial operation, and subject to property taxes. And because the Marlins negotiated a lease clause that the city is responsible for all taxes on the garages, it's the city that is now on the hook.
Score one for Florida tax law for closing an often-used tax loophole (though I'm now wondering: should publicly owned stadiums in the state be taxable under the same interpretation of the law?), but points off to Miami for not asking their tax lawyers about this, you know, before going and building a $642 million stadium. As I noted to Viglucci and Mazzei, this is just another sign of how cities get rings run around them in lease negotiations because the teams hire all the best lawyers.
Miami Mayor Tomas Regalado estimates that the tax bill will come to between $1.5 million and $2 million a year, which amounts to a total of maybe $25 million in present value. It's important to note that this isn't an additional subsidy — it's just shifting $25 million in stadium burden from the county, which collects the property taxes, to the city. Still, it's another indication, like the funding squabbles in Kansas City and Cincinnati, that you really want to work out who'll be paying for what before you start pouring concrete, let alone building terrifying home run celebration sculptures.