Continuing Glendale, Arizona’s bid to be the cautionary tale for more or less everything, KJZZ-FM has a long report on the disaster that has been the city’s construction of new spring training stadiums for the Chicago White Sox and Los Angeles Dodgers while hoping to pay them off with money from sales tax proceeds from a surrounding development. Operative word: “hoping.”
It’s impossible to predict how long [7-year-old William] Almazan will play baseball. But if he settles in Glendale as an adult, there’s a real chance he’ll have to help pay some of the roughly $331 million the city currently owes on Camelback Ranch.
“Possibly one would argue this was a high-risk transaction,” said Michael Bailey, Glendale city attorney…
Retail, hotels and a golf course were planned for around Camelback Ranch, which Glendale agreed to build in 2007. But the economy tanked in 2008. The venue opened in 2009, and developers failed to deliver sales tax generators needed to pay for the project.
Now the facility is only projected to bring in $160,000 over the next year, and there’s still no developer.
Yup, that’s bad! The city has already paid $96 million on debt service for the stadium, and according to KJZZ’s charts — which don’t exactly match that $331 million figure above — has more than $227 million to go (non-present-value numbers, mind you, so the true cost is going to end up closer to the $152.6 million that the city actually borrowed for the ballparks several years ago). And now all that money has to come from the Glendale general fund, because nobody’s paying sales taxes on an empty lot.
But! If we’re going to take into account the substitution effect when something new is built, we need to do so when something isn’t built as well. So maybe when the Camelback Ranch development failed to take place, developers chose to build something else somewhere nearby instead, and locals are spending money and generating sales taxes there instead, and maybe that place is even in Glendale! Slim silver lining, I know, but when you’re Glendale, you have to take them where you can find them.
KJZZ seems like a poorly thought out sequence of station call letters.
Depends. There was a KJZZ-FM in Seattle for years that had a jazz format, so the calls made sense in that context. Apparently this version of KJZZ is a station licensed to a college in Tempe not named ASU that sneaks in some jazz and blues 10 hours a day (mostly overnight) when they’re not airing hours of NPR programming blocks.
I think Neil deMause needed to do a little more research. The Chicago Cubs do not train in Glendale, AZ. However the Chicago WHITE SOX do train there. Get your facts straight!
Thanks for pointing out its the Black Sox and not the Cubs screwing over the taxpayers of Glendale.
Yep, I knew that, my fingers didn’t. Fixing now.
The Cubs have their own taxpayers to screw – those in Mesa, on the other side of the valley.
Don’t subsidized sports arenas generate “economic impact?” Doesn’t Glendale have several subsidized arenas? Glendale is awash in Economic Impact. This is fake news.
Yes, Glendale does its part to increase economic impact. They plan on giving a developer kickbacks to open a new Sears
This can’t be right. Economic Research Associates conducted an economic impact study of the proposal and concluded it would generate $15-20M per year. I mean, who could say no to that much free money?
http://www.glendaleaz.com/Clerk/agendasandminutes/Workshops/Agendas/021814-W01.pdf
“The City of Glendale commissioned two economic impact studies to determine the potential impacts of the proposed project. The first study, dated March 17, 2006, was an economic impact analysis prepared by Economic Research Associates (ERA) and assessed the value (considering direct impacts only) that the specific franchises (Dodgers and White Sox) might bring to a new Spring Training facility located in the vicinity of Glendale’s Sports and Entertainment District. The study included an assessment of the economic impacts each team had on their spring training communities in 2006 and concluded that if located in the aforementioned area, the total estimated direct economic impact of the two teams would be $14.9 million per year with the potential of $19.2 million per year if the facilities were operated yearround.”
The people who make economic impact studies are the modern equivalent of snake oil salesmen and should be treated as such (mostly in prison). Like 80% of them are pure marketing BS posing as actual research.
There’s a very simple way for municipalities or states to eliminate (or at least severely reduce) the risk associated with “ancillary development” revenue shortfalls.
The developer or team owner seeking the subsidy always crows about how the “new” tax revenues alone will pay for the stadium… so any land included as part of a BRZ is assessed on a 5 year scale, over which the raw land becomes taxable at an agreed schedule that closely mirrors “fully developed” rates.
If the land (as so often happens) remains undeveloped, it generates as much tax revenue as it would have done anyway. Either the team owner or the land developer him/herself can be on the hook for the shortfall, but the issuer of the subsidy will not be.
A clause in the agreement also stipulates that should the developer go bankrupt, ownership of the land reverts to the local authority.
The only parties who would balk at such a requirement are those who know the ancillary development will never happen.