County Commissioner Tim Boyd replied to a letter from City Chief Financial Officer Brent Goldberg giving his (Goldberg's) reasons why it is better for the city and county to undertake the stadium than private developers.
Comments by Commissioner Boyd are in bold.
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 What other community leaders have committed their citizens to do should have little or no bearing on what we do here in Hamilton County.
Remember, Hamilton County is one of the very very few counties in the entire country with three AAA bond ratings. Counties should be following our lead. We don't need to be following others lead.
-
8 stadiums were 100% publicly funded Again....so what? One of these stadiums has already been torn down at a cost of $1,000,000 and that same community is still paying on the original 25 year bonds. Two other of these stadiums built are not living up to the projected ticket sales or development. This is the risk factor to our taxpayers I want eliminated.
-
14 stadiums were 80%+ publicly funded Still, the argument is not sufficient to guarantee that the citizens of Hamilton County and Chattanooga will not be left holding the bag for debt service shortfalls because some of the key assumptions of the project were never realized. We do know that the prices of material and labor are going up and we all may in for a recession before the current inflation is under control. Very risky time to be making assumptions about costs and revenue for any endeavor.
-
These stadiums were publicly funded at some level because private only financing is not feasible The stadium will be located within a TIF zone which is also in an Opportunity Zone. Any private group building the stadium will have all incremental property taxes dedicated towards paying off the stadium bonds which is the publics' participation without guaranteeing the bonds and being responsible for any shortfall in debt service plus any profitds and capital gains will not be fully taxd by the IRS. Net effect of the TIF is the Stadium owners will not be paying any property taxes.
-
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 owners cannot make the numbers work with all of the revenue associated with operating this "year round" event stadium from ticket sales from the Lookouts and the Secondary Tenant (?) plus getting all of the revenue from stadium advertising, parking revenue, merchanise sales, food sales, and the stadium sponsorship revenue, then perhaps the project is not viable for the citizens of Hamilton County.
-
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 $12,000,000 hole is over the 30 years The Hotel/Motel tax can and should make up for this deficiency. This project is an example of exactly why the H/M tax legislation was put in place. After all, if the $12,000,000 is in fact over the life of the bonds we are only talking about $400,000/year, and the County is expecting the H/M tax to generate over $10,000,000 in FY2022. Easy enough to have $400,000 of H/M tax redirected from the CVB into helping pay off the stadium bonds.
-
If the stadium is privately owned, it would be taxable real property. These taxes would be significant and perhaps help pay off the bonds early. As noted above, the incremental portion of the taxes would go directly towards paying off the bonds due to the TIF, i.e. net effect is the owners pay
-
$---0--- property taxes until the bonds are paid off. Then the owners generously gift the stadium to the City and County resulting in the Owners continuing to pay $--- 0 --- in property taxes; truly a WIN-Win for everyone!! Again this argument is very shallow as a reason for the citizens of Hamilton County to be held responsible for the bonds.
A public/private partnership makes the stadium possible, 22% of the stadium construction cost is covered by private funding No one has shown me that the Lookout owners are putting up any funds for the stadium. Can anyone tell me 20% of what number? Additionally, private funding will be provided at approximately $1.5 million per year to maintain the stadium. The $1.5 million is operational cost of the stadium and is a line item in making the numbers work. If the operational costs go up at a greater factor than assumed who will pay for the difference, taxpayers or owners? Plus under the current plan, the city and county will still be responsible for any capital improvements to the stadium that might be necessary over the life of the bonds.
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. I fully and absolutely understand what I have been told to me by Mayor Copponger which is $80+ million of 30 year bonds guaranteed by the taxpayers of Hamilton County and the City of Chattanooga will be used to fund the construction of the stadium. If the project has 20% private funding, why the need for $80+ million of bonds? Again, very confusing information shared with me and the public. If the developers are 100% confident and dedicated to $1 billion of development over the next 30 years at the US Pipe/Wheland site then if a stadium is built why should they worry about the stadium bonds if by their own claims of the bonds being paid off early, why don't the numbers work. The public is guaranteeing participation through having property taxes help to pay off the bonds. Please explain.
I would be glad to meet with you to further discuss these issues face-to-face...regards,
Commissioner Boyd