So maybe one city throwing $30 million at a minor-league hockey facility isn’t enough of a sign that the sports subsidy business is in full effect? How about a county approving full property tax breaks for a $1 billion NFL practice facility?
After more than three hours of debate Monday night, York County Council narrowly voted to approve its end of a package that clears the way for the NFL team to move its headquarters and practice facilities from Charlotte to an undeveloped site off I-77 between Cherry Road and Dave Lyle Boulevard.
The deal on Project Avalanche, as the county termed it, involves the City of Rock Hill foregoing all its property tax revenue from the Panthers project for up to 30 years. The Rock Hill School District would put 75% of its Panthers revenue up in the agreement, and the county 65% of the revenue it collects. Those funds would go to $225 million worth of project infrastructure.
A few notes on this:
- Yes, that’s really a $1 billion practice facility, though it also isn’t really just a practice facility, since it will also include other development like office and residential space. And yes, this will inevitably siphon off development that might have taken place elsewhere in the county; councilmember Robert Winkler, one of the three no votes, noted that Carolina Panthers owner David Tepper will have an advantage over nearby developments in leasing space thanks to his lower property tax payments: “We’ve picked Tepper as the winner in York County for the next 30 years,” said Winkler.
- Yes, that’s $225 million in “infrastructure,” up from $160 million last June, though even then it was anticipated that the public price tag would increase.
- Yes, the council vote was taken without any members of the public present, though they were allowed to submit comments via Zoom. And yes, the vast majority — 26 out of 30 commenters — were opposed to the deal, but councilmember Joel Hamilton said, in the words of the Rock Hill Herald, that he “wouldn’t want to explain decades from now why council whiffed on a billion-dollar deal because of a Zoom issue,” because Zoom must offer a filter that makes you look more opposed than you actually are, or something?
- Yes, there was a swing vote who switched to the “yes” side at the last minute, as there almost always is: Councilmember Allison Love told the Herald she decided to change her vote because the project would be an economic boon for the whole region: “Everybody’s going to benefit from it.” Cf. above re: cannibalizing development that would otherwise go elsewhere in the county, though I guess you can’t put a price on all those people who turn out to watch football practices.
Here’s where I should probably say something snarky, but I’ve been boggling at these votes for almost 25 years, man, and it’s tough to come up with new ways to laugh to keep from crying. Two massive public subsidies in one day, though, one for minor-league sports and the other for a practice facility, in the middle of a global pandemic that has shut down much of the world’s economy and drained public treasuries, is admittedly a cut above the usual level of jaw-dropping. I’m tempted to call it Peak Griftocracy, but I’m not really confident that it won’t be topped in another few months — if there’s one thing this gig has taught me, it’s that things can always get worse.
Neil: I thought there would be a pause on the Stadium deals. I was wrong and you were right that that was not happening.. I tip my hat to you.
I made the mistake in, I think it was 2003, of telling someone I thought the tide might be turning. It turns out to be a very persistent tide.
I would think some of development would be siphoned off from North Carolina and not just other parts of the county wouldn’t it?
I mean maybe, but is that really worth $225mil? I can tel you right now! No. And that isn’t even getting into the whole moral hazard issues.
I can see in an instance like Anaheim and the Angels where land is scarce and the city of Anaheim held all the cards and gave them away, but in this instance, I guess it doesn’t bother me for a suburban area of Charlotte to for-go taxes so they can get a developer to fork over $775 M. Am I missing anything?
Taxes aren’t windfall profits for municipalities. Municipal taxes are (or are supposed to be) the cost to provide government services to each and every development (be it a home, apartment building, shopping center or sports facility).
So when Mr. Tepper gets his property taxes “forgiven” it doesn’t mean that the city just doesn’t “profit” from the development. It means that someone else is paying Mr. Tepper’s taxes for him, as the cost of running the government still has to be paid.
If we assume that the approx 270,000 people living in York County (it’s almost a full ten years since the last census, so estimates will have to do) will all pay extra taxes to cover the $225m Mr. Tepper won’t be paying over the term of this deal (and this is just for demonstration purposes, the amount won’t be split evenly between all residents of course), then you can easily see what each county resident’s prorated share of the tax subsidy will be.
Since the school district is putting up 75% of the revenue it would get from this development as part of the deal, I guess I don’t need to talk about what some of that $850 per resident would have gone to if it wasn’t going to a Panthers practice facility.
I smell a hole in the school district budget swelling as we speak!
Well they aren’t “forking over $775”. Its not like he cuts the local government a check. A lot of that money goes to construction companies and materials suppliers, which might be local, might be not. Ditto their workers. Sure some of that money spent will stay in town, and the new residents and commercial spaces whatever will help some. But its all about opportunity cost.
And this type of deal when you pencil it out almost never makes a lick of cent, creates all sorts of poor economic incentives/distortions, and is a moral hazard in a variety of ways.
Hey Neil,
Have you seen our least favorite turtle’s comments about the Senate letting cities and states go bankrupt rather than affording them a bailout? Building on your article the other day about all debt being equal, what impact would municipal and state bankruptcies have on stadium debt? Would that allow government entities to revisit lease agreements with teams? If those kinds of bonds are no longer invulnerable to bankruptcy, would it impact potential financing for future projects, especially in smaller to mid-sized cities?
Yeah, that’s not gonna happen. McConnell is just using this as a way to say “don’t come to us for money, stop paying public servants their pensions if you want to balance your budgets.:
I heard him make that comment as well, but aren’t pensions typically coming from different pools of money and/or have different obligations than discretionary spending? It just seems that gutting pensions during a depression is just as unlikely as declaring bankruptcy. What public employee union would allow that to happen?
This article reuses Neil’s favorite stadium rendering. https://www.thechronicleherald.ca/news/local/stadium-funding-and-site-proposals-pushed-to-back-burner-440908/
The Halifax CFL franchise and stadium movement has stalled. Anthony Leblanc took a job with the Senators and is “taking a back seat” in this effort. They still do not have a site (they are looking further afield including sites near all the suburban shopping and the airport). They do not have any funding although they are still hoping the province will come through with $50M. In the understatement of the century, the province of Nova Scotia has other things it is dealing with right now.
Interesting, thanks for the link.
Was it ever “not” on the back burner? City staff did do stirling work on the project and it’s impacts (both positive and negative), but I never had the feeling that SSE (if that was their name) was anywhere close to a workable funding model.
They said they would put “some” money in but were clearly expecting that other people would fund the majority of the facility. That’s not uncommon, of course, but when the funding gap is 50% of the cost or more you do have to wonder whether the prospective investors had effectively pulled the plug on the project. They say no, but…
The most surprising thing about this is Leblanc taking an actual job. For a former co-owner of the moribund Coyotes, this is quite a dramatic turn. It makes me wonder whether his background is really what he claims it is.
Maybe what Amazon should have done a couple of years ago was propose an Islanders practice facility (that just happened to also have their HQ2 facility in it) in Astoria.
What’s next, a billion dollar practice facility for the Staten Island Yankees?
So the Bundesliga (DfL) publicly announced their very detailed and German plans for reopening Bundesliga and 2.BL in May. Many politicians have expressed support for the plan but nobody has actually given permission or forbidden them.
The plans are extensive (the have numbers of people, positions, times, etc.): 4 ballkids (not sure if they plan on using actual children), lots of tv broadcasting people, home team gets 8 fans/execs/owners and visiting team gets 4, 4 polizei in stands, 10 security in stands, 6 security on field, etc. When they had the ghost game in Moenchengladbach before stopping all games there were over 1000 fans outside and you could hear them on the broadcast. The will have 50 security officers outside the stadium (along with 40 people in the TV trucks).
They also have plans for testing (already signed deals with 5 testing labs) and have protocols for positive tests.
https://media.dfl.de/sites/2/2020/04/2020-04-23-Task-Force-Sportmedizin_Sonderspielbetrieb_1.pdf
Also, the 3.Bl has been offered 7.5M Euros to restart but there is still considerable division with 40% vocally against restarting. They are having an emergency meeting tomorrow after a split vote. Most of the lower leagues have been cancelled.
Ahh the last minute swing vote, one of my favorites. Who was the bagman and how much green was in the sack? Local pols always came cheap in my humble experience–that’s why us Club of 32 guys always win the game in the end!