There hasn’t been much new detail on the state of Maryland’s $1.2 billion stadium slush fund for the Baltimore Orioles and Ravens since it was passed in April and then revealed that actually spending the money was contingent on new leases. But a report by The Center Square, the conservative news service formerly known as Watchdog, sheds a little more light on the situation, sort of:
In April, Tom Kelso, chairman of the Maryland Stadium Authority, in an exclusive interview with The Center Square, said he viewed the bills “as evergreen.”
“We don’t anticipate spending $600 million at one time on either stadium,” Kelso said at the time. “You would get to that level as projects are conceived, developed, and built, but it would take several years of upgrading and reinvest. In a larger concept, reinventing portions of the stadium. Every time there is a new bond issue, the lease would have to be extended to last as long as the bond for the most recent project.
“It is not a one-time, $1.2 billion expense. It allows the stadium authority to borrow up to $1.2 million. As those bonds are paid down, it creates the capacity to borrow back again.”
The article ends there, so we’re left to read between the lines on a bunch of things:
- If the state doesn’t “anticipate spending $600 million at one time on either stadium,” then are we to understand that it’s still up for negotiation how much money the Orioles and Ravens owners would get in exchange for a lease extension? (The MSA promised to “inform the citizens and taxpayers of Maryland when each agreement is completed and presented for approval,” which, uh, yeah, that’s the minimum required by law, to reveal proposals once they’re being voted on.) Shouldn’t these negotiations be a bigger deal for public discussion, since giving a team owner, say, $500 million for a ten-year extension is very different from $50 million for a 50-year extension?
- “Every time there is a new bond issue, the lease would have to be extended to last as long as the bond for the most recent project.” So the lease extension will be based on how long the financing of the bonds lasts? That seems exceptionally dumb — as anyone who’s bought a home knows, how long you take to pay it off is purely a bookkeeping question around whether you’d get your payments out of the way fast or spread them out over time, and has nothing to do with how long you plan on living there — and would seem to encourage the team owners to want as much money in each bond issuance as possible, if it’s going to require the same length of lease extension in exchange.
- “As those bonds are paid down, it creates the capacity to borrow back again.” So it’s not $1.2 billion in bonds, it’s a permanent revolving fund with a $1.2 billion cap? Let’s go to the bill itself:
Unless authorized by the General Assembly, the Board of Public Works may not approve an issuance by the Authority of bonds for sports facilities at Camden Yards, whether taxable or tax exempt, that constitute tax supported debt if, after the issuance, there would be outstanding and unpaid $1,200,000,000 face amount of bonds for the purpose of financing the preparation, relocation, demolition and removal, construction, renovation, and related expenses for construction management, professional fees, and contingencies of sports facilities at Camden Yards.
That is indeed what it seems to be saying, then, but it’s not at all clear what limits, if any, the MSA has on issuing bonds so long as it doesn’t have more than $1.2 billion in stadium debt outstanding. (Presumably it can’t sell more bonds than it can pay off with lottery proceeds, right?) So there’s no easy way to say precisely how big the Orioles and Ravens stadium slush fund is, but “more than $1.2 billion, maybe a lot more” seems like a reasonable conclusion.
So there’s some potential good here — the state of Maryland hasn’t committed to spend $1.2 billion on Orioles and Ravens stadium renovations just yet — and some potential bad — the limit on state spending on the two teams isn’t actually $1.2 billion, it is, apparently, the sky. Once again, if there are any journalists still rattling around the Baltimore area who are allowed to write about actual news, this would be well worth investigating further, preferably before the endless money pipeline gets up and rolling.
I don’t get this bit.
“As anyone who’s bought a home knows, how long you take to pay it off is purely a bookkeeping question around whether you’d get your payments out of the way fast or spread them out over time, and has nothing to do with how long you plan on living there.”
But I can sell the house and use the proceeds to pay off the loan and, hopefully, use whatever is left over on the down payment of the next house. The bank has factored all of that in when they offer agree to offer a mortgage at a certain rate.
But the Ravens (or Orioles) can’t easily just sell their stadium to another NFL (MLB) team.
And I thought the point was that they’re leasing it, instead of buying it, so the point of extending their lease would be to make it very expensive for the team to leave before the lease runs out, assuming there is some clause that says they owe X millions/billions for breaking the lease. Because unlike an apartment lease, it’s hard to find a new tenant for an NFL stadium if the one you have skips out in the middle of the night.
So it’s to the city’s advantage to make sure the lease never runs out.
It’s not worth an endless sea of public money, of course, but they want to make it as difficult as possible for the teams to relocate (although it’s already very difficult to move an MLB or NFL team. There just aren’t many viable cities left to move to).
Right, I wasn’t referring to an apartment *lease*, but to an apartment *mortgage*. Whether to take out a loan at X% interest for 20 years or Y% interest for 30 years is just a matter of how you choose to pay off the money you borrowed — so it’s ridiculous to tie the length of the loan to the length of the tenant’s lease.
That Maryland seems to have done that regardless doesn’t make it any less ridiculous.
Oh I see. In this situation, the state is the landlord with a mortgage and the team is just a tenant.
I guess it’s just a way to make it appear that they are somehow buying a commitment from the teams not to leave. I suppose they are, but they are paying way too much for it.
I am perhaps an idiot, but knowing how precise legislators try to be with their language so as to eliminate (or, sometimes, purposefully create) loopholes, I don’t get this:
> Unless authorized by the General Assembly, the Board of Public Works may not approve an issuance by the Authority of bonds for sports facilities at Camden Yards, whether taxable or tax exempt, that constitute tax supported debt if, after the issuance, there would be outstanding and unpaid **$1,200,000,000 face amount** of bonds for the purpose of financing the preparation, relocation, demolition and removal, construction, renovation, and related expenses for construction management, professional fees, and contingencies of sports facilities at Camden Yards.
Shouldn’t there be an “or more” in there? Doesn’t this technically *allow* *any* amount of bond financing for Camden Yards so long as the amount isn’t *exactly* $1.2b?
Again, I may be an idiot; I could be over-reading this, and if they tried to issue more bonds than that, perhaps someone in state government would step in to say, Uh, no, clearly the Legislature meant this to be a cap. But it seems odd that the language itself isn’t clearer on that point.
Yes, the remainder of the bill talks about limits on bond funding for specific purposes, but those sectioned limits total up to $1.475b. So, based on the language of the bill, it sure *looks* like each of those subsections could be fully funded without technically violating that it-can’t-be-exactly-1.2b part. Weird.