Rays TIF subsidy assumes stadium site will grow 7% a year in value, would cost taxpayers $1.5B either way

access_time personNeil deMause

As the St. Petersburg city council prepares to launch public hearings tomorrow on a new Tampa Bay Rays stadium that could cost taxpayers $1.5 billion in cash, tax breaks, and discounted land, the Tampa Bay Times headline department asks the burning question:

St. Petersburg is counting on 7% growth to fund Rays project. Is that risky?

Short answer: Duh. Slightly longer answer: Duh, but not necessarily much more risky than if it were projecting less growth in downtown tax revenue.

Even more slightly longer answer: Mayor Ken Welch’s Rays stadium package would include $417.5 million in tax increment financing, kicking back all new property taxes from the stadium site to pay off construction bonds and infrastructure costs. Part of that calculation is an assumption that the property will grow in value by 7% a year through 2042, spinning off tons of new property taxes to kick back to the stadium project (attendant vaportecture hellscape pictured here).

University of Tampa accounting professor Kimball Adams tells the Times that this is overly optimistic, under the accounting principle of shit happens: “I guarantee you, nobody in 2019 predicted a pandemic in 2020. You can’t project worst-case scenarios, that 1-in-100-year event. Are we going to get a Cat 5 hurricane in the next 40 years? I don’t know. You can’t project that. But the further you go out, the less confidence you should have.”

That is extremely true, and should be a concern in terms of whether the TIF district will actually be able to cover that $417.5 million in costs or whether St. Petersburg may have to dip into its general fund. (It will already have to do so starting in 2042, when Welch’s plan has it scheduled to spend $220 million in general fund dollars on the Rays stadium.)

But to see the bigger problem here, instead of looking at what happens if the TIF money falls short, let’s look at what if it doesn’t. The TIF district, a large swath of land known as the Intown Redevelopment Area, has historically grown in value at a rate of 8.25% a year, something city officials used as an argument that 7% growth is a conservative project. But if downtown St. Pete land is growing in value at 8.25% a year, then future growth of 7% a year wouldn’t really all be new money attributable to the stadium. Rather, much of it would be money that St. Pete would normally get to keep, but now would instead be handing back to Rays owner Stuart Sternberg, on the grounds that his new stadium caused a leap in tax revenues that had been going on all along.

(Just after posting, I amended the above to say “much of this” money, because some of it would be increased property tax kickbacks from the stadium itself, which wouldn’t exist without this project. Though something else certainly could get built there in the absence of a stadium, so it could easily end up being all money the city would get anyway.)

Or if you want a shorter answer again, economist J.C. Bradbury has done so with his trademark 280-characters-or-less skills:

Bradbury also points out that the media seems to have forgotten that the Tampontreal Ex-Rays plan has been dead for two years, which is very good for any plans Sternberg and Welch might have to press the council for approval of the stadium subsidy on the grounds that the team might leave without it:

If you want more tagteaming by me and J.C., you can find it on the latest episode of Ben Lindbergh and Meg Rowley’s Effectively Wild podcast that was recorded yesterday and dropped last night. Plus MLB’s “latest pants-related wardrobe malfunction,” I gotta check out that part myself.

Other Recent Posts:

Share this post:

3 comments on “Rays TIF subsidy assumes stadium site will grow 7% a year in value, would cost taxpayers $1.5B either way”

  1. Honestly, teams city governments, and local media should just acknowledge that there’s never a good version of these types of subsidies, and to start centering their appeals on emotions, feels, sentimentality, and potential heartbreak, rather than just continue to trot out these “financial savings” and the “ancillary benefits” that study after study after study has proven to be complete horse hockey (word to David Samson), and that only a tiny percentage of hardcore sports fans in any given market ever buy into anymore.

    Sports fans demand transparency whenever our teams trade popular players, lose a few important games in a row, or stink up a storm several seasons in a row. They never seem to keep that same energy when those same teams stay mum about what exactly they’re looking for in a new or renovated venue, most of which will be paid by the locals, the vast majority of whom are NOT avid sports fans, or even casual ones.

    1. I’m not sure I agree with you about sports fans in general — there’s no particular evidence that they’re more inclined to support team owner demands than non-sports fans are. (Vocal minorities excepted.)

      The reason why team owners and politicians make appeals to “ancillary benefits” and the like *in addition to* the sentimental arguments is that some work on some people, and some work on others. Or some provide cover to people who want to support it for other reasons (because the lobbyists at all the cool parties say to, for example) and when that fails they want to be able to say “well OKAY BUT” and then go to Argument B.

  2. New vaportecture for the area surrounding the stadium (but not the stadium itself). No apparent fireworks or lens flares. Also no commitments from actual restaurants, shops, etc.

    https://stpeterising.com/home/rays-and-hines-release-new-renderings-of-gas-plant-redevelopment

    Also, the meeting to review the actual stadium proposal was supposed to be in two weeks, but has been postponed until *???* due to *reasons*.

Comments are closed.