Goldberg Says Boyd Plan For Stadium Not Feasible Due To Much Higher Interest Costs Private Developers Would Face

City Chief Financial Officer Brent Goldberg said an alternate financing plan proposed by County Commissioner Tim Boyd to make a Southside stadium possible is not feasible due to the much higher interest costs that private developers would have to pay.

 

He said most stadiums constructed recently have public help.

 

Mr.

Goldberg said, "Thank you for your thoughtful consideration of the project financing plan and your willingness to look for opportunities to make this project happen.  After reviewing your alternate financing proposal, we have identified several challenges.  

• 18 of the 19 stadiums built since 2002 included some level of public funding

  • 8 stadiums were 100% publicly funded

  • 14 stadiums were 80%+ publicly funded

• These stadiums were publicly funded at some level because private only financing is not feasible

• Borrowing through conventional construction loans would double the interest rate,  which means the annual payment would be approximately $2 million more than the payment on bonds.  This fundamentally changes the economics and makes the deal nearly impossible for any private owner

• If the stadium is not publicly owned, we lose the sales tax recapture from the stadium.  State legislation only allows the sales tax recapture for a publicly owned stadium.  This eliminates a significant revenue stream for debt service, creating a hole of more than $12 million

• If the stadium is privately owned, it would be taxable real property.  These taxes would be significant and further increase the cost

"A public/private partnership makes the stadium possible, 22 percent of the stadium construction cost is covered by private funding.  Additionally, private funding will be provided at approximately $1.5 million per year to maintain the stadium.  In total, private funding for the stadium will total more than $75 million over thirty years for construction and maintenance.

"Also, I want to be clear about the financing plan we have proposed.  No existing property taxes in Chattanooga and Hamilton County will be used for construction of the stadium. Furthermore, the stadium will be a catalyst for economic development, creating a regional asset that will drive up to $1 billion in new investments for Chattanooga and Hamilton County."