Wednesday, October 18, 2017

Understanding the Soccer stadium deal.

Metro is proposing to build a soccer stadium at the fairgrounds to be financed by $225 million in revenue bonds and general obligation bonds. Revenue bonds are paid off by the revenue generated by the project. That is the way we finance the building of public parking garages, convention centers, and sports stadiums. One thing the public should keep in mind is that if the revenue is insufficient to pay for the bonds, the bonds become a general obligation of the city. If the city should get a soccer franchise and then five years down the road we should lose the franchise, what happens?

There are ways to mitigate the risk to the taxpayers. One way the risk is mitigated is by partnering with private developers who will also be at risk. The greater the investment by the private sector, the less risk the public carries. Other options are bonds that insure against failure.  Other factors that need to be addressed upfront is who is responsible for upkeep and modernization. Some cities lose a franchise when a team leaves a city because the city will not upgrade a facility to the satisfaction of the team owners.  All deals like this carry risk to the tax payers but some deals are much worst than others.  The details can matter.

If you really want to get into the weeds on the soccer stadium issue, a good place to start is by reading the resolutions and watching this meeting of the Budget and Finance Committee. For more details you may want to watch the special meeting of the Sports Authority at this link.

Watching committee  meetings also informs you of which council members ask probing intelligent questions. While not everyone is on the Budget and Finance Committee and only committee members can vote, any member may attend meetings of the committee and participate. The real work of the council is done in committees. Unfortunately the sound quality in this video is not that great at the start of the video but it gets better a few minutes  in.

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