July 03, 2008
Seattle suit settled; Sonics heading for OKC
The city of Seattle unexpectedly threw in the towel in its suit to keep the Seattle Sonics in town for another two years yesterday (apparently its expert testimony wasn't doing much good), announcing a settlement deal in which owner Clay Bennett will pay $45 million for the right to immediately terminate his lease and move the team to Oklahoma City.
Bennett also agreed to pay Seattle an additional $30 million in 2013 if the city has been unable to land another NBA team - but only if the state legislature has by then agreed to spend $75 million toward a $300 million renovation of KeyArena.
Whether or not you consider this a proper ransom for a 41-year-old NBA franchise, the extra $30 million payment does make for some interesting incentives going forward. First off, it makes the prospect of taxpayers fronting half the money for a renovation go down a bit easier, if the public could get an extra $30 million to defray its costs. (Would this count as a return on public investment, as required by Seattle law?) Bennett, meanwhile, suddenly has an incentive to push the NBA to put a team in Seattle if the arena reno plan goes through - though it's hard to picture the NBA ignoring that market with a publicly renovated arena, David Stern's bluster notwithstanding. As 2013 nears, we could even see a kind of arena arbitrage, with the state trying to time arena funding to meet the deadline without giving the NBA enough time to find a replacement franchise by the cutoff, thus getting its $30 million and the prospect of a replacement Sonics, too - though that's probably more forethought than is reasonable to expect from elected officials.
As for the Sonics, they will now become the Oklahoma City Something-or-Others; the Oklahoman newspaper, throwing all pretense of objectivity out the window, put a photo of a basketball surrounded by champagne glasses on their website's front page to mark the occasion. The only possible stumbling block: Former Sonics owner Howard Schultz is still moving forward with his lawsuit to nullify the team's sale on the ground that the new owners didn't make a good-faith effort to keep the team in Seattle, as required by the sale agreement. Given that the talk of boycotting Schultz' Starbucks Coffee has already begun, you can see why he wouldn't want to back down - especially given that alienating his hometown customers is the last thing Schultz needs right now.
Demolition of Tiger Stadium is underway
The demolition of 96-year-old Tiger Stadium began this week, with crews punching a large hole in an exterior wall, no doubt to begin moving in equipment. (If I'm reading the photos right, it's the wall along the left-field side, along Fisher Freeway.) An FoS reader sends along a closer view.
Meanwhile, the Old Tiger Stadium Conservancy is now taking online donations toward its campaign to preserve the section of the grandstand from first to third base. It looks as if earlier reports that only a small section of the lower deck would be saved under the plan was incorrect, though much of the seating in the latest plan does appear to be displaced for stores or offices.
July 02, 2008
Yanks bond costs a state secret
Today's Yankees stadium bond hearing delivered more heat than light - at one point, assemblymember Richard Brodsky berated the sole witness, city development chief (and fellow Harvard Law School alum) Seth Pinsky, "Who did you have in Civil Procedure? Because you would have gotten an F for that answer") - but in the course of three hours, it did reveal answers to a few questions about the Steinbrenners' latest tax-exempt bond demands:
- First off, no one knows whether the exact bond request is $350 million or $400 million because no official request exists: The Yankees have only submitted a "partially completed draft application," according to Pinsky. (The Mets, he said, are working on their own, smaller bond request.) Serious bond talks won't be finalized until the IRS makes a decision on its new tax-exempt bond rules.)
- Those rules, Pinsky told reporters following the hearing, would effectively preclude the use of tax-exempt bonds for New York sports stadiums - while bonds could theoretically be sold with the bond payments floating with tax assessments, as the IRS is thinking of requiring, "the investment community has said that the risk of the floating rates is too great, and that people won't buy bonds that are secured by revenues where they're not sure what the total revenues will be." If true, this could mean the fate of the Nets' Atlantic Yards plan rests on a friendly decision by the IRS, though Pinsky was quick to add, "I believe that this project is going to happen - we believe it's a very important project for Brooklyn."
- Though Yankees COO Lonn Trost told reporters in February that the added funds would go to pay for such things as a six-story-high scoreboard, expanded concessions facilities, and rush charges stemming from delays in getting the project off the ground, Pinsky refused to give any details about where the money would go, even redacting what information the Yankees provided in documents supplied to Brodsky's office, on the grounds that it was "competitive information" that might give the team's suppliers an advantage in negotiations. (If you've ever met Richard Brodsky, you can picture what his response was to this. If you haven't, here's a reasonable facsimile.)
For more on the hearing, see my report at the Village Voice website, real soon now.
UPDATE: here's a direct link.
Crab break
I've been away the past few days in Baltimore - including a visit to stadium-that-started-the-new-ballpark-craze Camden Yards, which turns out to have fine sightlines when there are only 5,000 people in the stands - so I've fallen a bit behind on the news updates here. I'll be back shortly with the latest reports, including one on today's hearing on the Yankees' latest request for $350 million in city-backed stadium bonds. Stay tuned.
June 25, 2008
Rays put stadium push on hold
The Tampa Bay Rays unexpectedly abandoned plans for a November stadium referendum today, saying they'll instead form a coalition of business and political leaders to seek "unity of purpose" on the stadium plan, with a possible vote in 2010.
The apparent reason for the about-face: Local political leaders were none too pleased with the short timetable, so the Rays decided that patience was the better part of valor. It's also possible that, what with the state second in the nation in foreclosures and the governor slashing the budget willy-nilly, this wasn't the best time to come asking for a couple hundred mil in public money for a new baseball stadium to replace the one that taxpayers just built 20 years ago.
As for whether the team will stick with its proposal for a waterfront stadium with a fabric roof, paid for in part by a land swap for the site of their current home, the Tropicana Dome, newly anointed coalition leader (and Progress Energy president) Jeff Lyash said, "I think the waterfront stadium is a viable option. I wouldn't foreclose that as an option going forward just because I think what we want to do is step back very broadly and try to identify all the possibilities." In other words: We're open to anything we think we can win a vote with.
Tiger Stadium demolition work imminent
Workers began building an 8-foot-high fence around Tiger Stadium yesterday, in anticipation of starting demolition work on the ballpark, which would otherwise celebrate its centennial four years from now. The city is still promising to hold off on razing the home-plate section of the grandstand, though, until August 1, to give the Old Tiger Stadium Conservancy time to raise money for its plan to preserve that part for youth baseball and other uses.
And this just in: The Conservancy has finally gotten a website up and running to take donations for the cause. So far they only take personal checks by snailmail, but an online donation system is promised "very soon."
NYC Parks Department on delays: Building parks is hard!
New York city councilmember Helen Diane Foster - best remembered as the only Bronx elected official to vote against the new Yankees stadium project, though she all but apologized for doing so - held a hearing yesterday into the progress (or lack thereof) of the replacement parks the city is supposed to be building to compensate for the parks destroyed to make way for the new stadium. Chief witness for the defense was parks deputy commissioner Liam Kavanagh, who argued that the new parks aren't really delayed (a track being built atop a parking garage will open a year late, he admitted, but the park it replaced stayed open a year longer than expected, so it's all a wash), while trying to explain how projected costs have doubled over the past three years:
"The earliest construction cost projections were made using industry standards for materials and commodities and comparable costs for similar projects. However, site conditions, environmental mitigation and the unique nature of some of these properties have resulted in higher estimates than were originally projected. The Waterfront Park site had 10 underground oil tanks rather than the four shown on the survey resulting in significantly higher mitigation costs. The seawall and subsurface require significant new infrastructure to support the park program. ... The first demolition estimates for the stadium were based on industry standards, but the stadium is anything but a typical structure and its proximity to two major subway lines makes the project even more complex."
Under questioning from Foster, Kavanagh denied that the city had "watered down" its initial cost estimates to make them more palatable, insisting, "I can assure you there was no attempt to underplay the cost of the replacement program." Maybe, when it comes to underground oil tanks - though you'd think by now anyone's best guess at how many rotting oil containers underlie any given plot of New York land would be "more than you want to imagine" - but you'd think the city might have noticed that Yankee Stadium sits next to two subway lines before now. Given that other cities have openly admitted lowballing projected stadium costs, it's probably best not to rule out the possibility that the Parks Department was, at the least, being optimistic when it initially told the city council the project would cost $135 million, instead of the $281 million currently budgeted. Either that, or they forgot to include shipping charges.
Meanwhile, the New York Daily News didn't send a reporter to cover the hearing, but did run a story the day before with the stunning headline "Parks Commissioner Adrian Benepe confirms plans to level Yankee Stadium." Stunning, that is, to anyone who hasn't been paying attention the last couple of years.
June 24, 2008
Supreme Court won't hear Nets case
The U.S. Supreme Court has declined to hear an appeal of the lawsuit against use of eminent domain to clear land for Brooklyn's Atlantic Yards project, which would include an arena for the New Jersey Nets. The plaintiffs say they'll now file a similar suit in state court, but that's considered an even longer shot to succeed.
Don't expect the steamshovels to power up just yet, though: A pending appeal of a state case challenging the project's environmental review is still set to be heard in September, and yet another state lawsuit (by tenants on the site) has just started working its way through the courts. Add in that developer/Nets owner Bruce Ratner is still uncertain how much of the project he can afford to build, that the proposed financing plan might be illegal under new IRS regs, and that local elected officials are demanding a moratorium on new demolition until Ratner can confirm that all the promised housing will be built, and Atlantic Yards' prognosis still needs to be considered "questionable."
June 20, 2008
Yanks' promises to Bronx still unfulfilled
Further updates on the New York Yankees stadium project:
- The New York Daily News' Juan Gonzalez reports that of the $1.6 million the Yankees were supposed to have given out to Bronx youth groups and nonprofits as part of the deal, only $12,000 has been allocated. And as for promises that construction jobs would go to Bronx residents, Gonzalez reports that the Yanks have provided no detailed numbers, and that some construction unions have been "checkerboarding" - shifting members already employed at Manhattan construction sites to the Bronx, raising their local employment figures without actually giving locals any more jobs.
- The new stadium isn't even finished yet, and it's already landed on amNY's list of the city's ugliest buildings. "What makes it so terrible is summed up by all the waste it represents," says "Harlem Lost and Found" author Michael Henry Adams. "Imagine, the 'House that Ruth Built,' where two popes have prayed, where Lou Gehrig declared himself 'the luckiest man on the face of the earth,' where Joe Louis struck a decisive blow against racism, where Mandela celebrated the end of Apartheid and New Yorkers collectively mourned 9-11; with fan's ashes scattered all over the outfield--deliberately, irrevocably, destroyed?"
- Ugly and ahistoric it may be, but the new stadium will boast a whopping huge Hard Rock Cafe.
Santa Clara vote pushed back to 2009
The Santa Clara city council voted this week to extend the negotiating period for a new San Francisco 49ers stadium until Feb. 1, meaning the earliest a public vote could be held on the plan would be next June. ("There are details to still be ironed out," said councilmember Dominic Caserta, which should come as a surprise to no one.) This could open a small window for San Francisco to work on its own stadium plan, though that effort isn't anywhere close to being ready for prime time, either.
June 13, 2008
More details on Yanks' latest money grab
As the furor over the New York Yankees' demand for $350-400 million (no one seems to agree on the exact number) in new tax-exempt stadium bonds spreads throughout the local news media - where were these people when the Yanks got their first $940 million in bonds, I ask you? - more details are beginning to emerge. Let's get right to them:
- New York City Independent Budget Office deputy director George Sweeting has supplied a breakdown of just how much $350 million in tax-exempt bonds would cost various levels of government: New York City, $3.6 million; New York state, $6.7 million; federal government, $72.6 million. The Yankees' savings, meanwhile, would be only $61.9 million - presumably the bondholders would be collecting the remaining slice of the action.
- Janel Patterson, a spokesperson for the city Economic Development Corporation, has confirmed that the IRS rule the city is looking to have waived for the Yankees is the one instituted last year (though apparently not yet officially finalized) that requires that (finance jargon alert!) payment in lieu of taxes being used to make bond payments constitute a set percentage of the property taxes they're supposedly in lieu of. (As noted previously here, bond buyers don't like that.) The Yankees could still presumably use tax-exempt bonds if the IRS says no, but the benefit wouldn't be as great.
- While I was at it, I asked Patterson to provide an updated breakdown of the cost of replacing parkland and building infrastructure for the Yanks project. Her reply: The total city cost is now projected at $280.8 million (down slightly from $282 million in March); of that, $177 million would go to replacement parkland (down from $190 million), $34.5 million to infrastructure/street work (up from $25-30 million), $38.96 million towards a new Metro-North commuter rail station (down from $39.6 million), and $30.4 million to "soft costs" that can't be assigned to one category or another (up from $22 million).
- All of the above is now reflected in the updated New York stadium cost spreadsheet.
In other news, several state legislators are up in arms over the latest Yankees proposal, U.S. Rep. Dennis Kucinich is demanding more information from the IRS as to why it approved the initial Yanks and Mets bonds, and state assemblymember Richard Brodsky says he'll hold hearings on the matter in "a couple of weeks" - hoo, baby!
June 12, 2008
Ninth life for Tiger
In what can only be characterized as a total shocker, Detroit Mayor Kwame "I want you soooo bad" Kilpatrick has granted a two-month reprieve to Tiger Stadium before it's entirely demolished by wrecking balls. The Old Tiger Stadium Conservancy, which missed a June 1 deadline to raise $369,000 to save a corner of the historic ballpark, will now have until August 1 to meet that goal; demolition crews will start tearing down part of the stadium in the interim, but will leave the section between first and third base untouched in case the Conservancy is able to raise preservation funds.
I swear this time I'm going to find out whether the Conservancy is taking online contributions. Stay tuned.
Wrigley sale stalled as Cubs demand more subsidies
The proposed sale of Wrigley Field to the state of Illinois went from unlikely to pretty much dead this week, as state negotiators said they'd reached an impasse in talks with the Chicago Tribune, which owns both the Cubs and the ballpark. The reason, according to chief negotiator (and former governor) James Thompson:
The Tribune believes that ISFA's participation in such an acquisition requires either the transfer of future sales and amusement tax revenue from transactions at Wrigley Field for the next 30 years, or the imposition of new taxes, or the transfer of existing ISFA funds now pledged to projects at U.S. Cellular. ... In our judgment, there are no votes in the City Council or in the Illinois General Assembly for transferred or new taxes for Wrigley Field.
Translation: The Cubs owners wanted even more tax kickbacks than Thompson himself proposed in March, so much so that Thompson didn't think he could sell it to elected officials. Since team chairman Crane Kenney just about said as much back in January, this shouldn't come as a huge surprise, but I guess Thompson's just an optimistic kind of guy.
In other news, the Cubs' internal books reportedly show that Wrigley can do just fine with standard maintenance, though, the Tribune (the newspaper, not the corporation) adds, "There are, however, economic incentives, such as the addition of suites and other amenities, that might make a more immediate overhaul desirable." In other words, if somebody else were to volunteer to pay to upgrade Wrigley, the Cubs would be happy enough to collect the resulting revenues. No wonder they wanted to hold out for a tax-subsidized renovation.
June 11, 2008
Yanks demand another $350m in bonds
Tell me you didn't see this coming: The New York Yankees have followed up their February announcement that their new stadium would cost $300 million more than previously expected by asking the city to sell $350 million in additional bonds to help pay for it. These would be tax-exempt bonds, so while the Yankees would make the bond payments, they'd save money by paying a lower interest rate; the estimated (by the city Independent Budget Office) savings of $60 million would come out of the city, state, and federal treasuries.
The big questions now: Will the additional bonds be allowed by the IRS, which changed the rules for tax-exempt bonds after the initial Yankees deal went through? And if the amount of bonds was already stressing the team's "now they're private money, now they're public taxes" argument - the city Independent Budget Office, remember, thought the team would end up paying $29 million a year more in "payments in lieu of taxes" than the taxes they'd be in lieu of - how on earth can they tack on another $350 million and pretend their bond payments have any relation to property tax levies, as IRS rules require? (The city says it's appealing to the IRS to change its rules, but hasn't provided any specifics yet about what it wants changed.)
For more on this, see the Village Voice Runnin' Scared blog... shortly. [UPDATE: It's up now.]
June 09, 2008
Best. Column. Ever.
If you only read one op-ed column this week, skip mine and go directly to Kevin Horrigan of the St. Louis Post-Dispatch:
Big Bob's Mortgages. We finance anyone. Big Bob speaking.
Yes, Big Bob. I need a mortgage loan.
Excellent. About how much were you looking to borrow?
About $800 million, give or take.
Eight hundred million. That would be our Super-Duper Jumbo Mortgage. It must be some home you're planning to buy.
It's not for me. It's for my tenant.
You want to borrow $800 million to buy a home for your tenant? May I ask why?
It's a football team. And I'm not looking to buy. I'm looking to build.
It just gets better from there, including one of the best capsule explications I've seen of how additional stadium subsidies get hidden in the lease agreement. ("Let me see if I understand: You built your tenant a new home in 1995. You give him most of $24 million a year. And he gives you back $250,000 a year?") E-mail it to your favorite stadium-smitten elected official today!
June 04, 2008
SF voters okay 49ers stadium plan
The plot just thickened: San Francisco voters yesterday approved a proposition 61-39% to build a development at Hunters Point that would include a 49ers stadium. At the same time, voters rejected 62-38% an accompanying proposition to require that the project include affordable housing for current residents of the area, a provision that developer Lennar Corp. had decried as a "poison pill" that would derail the whole project.
The proposition, however, is only advisory - it's still up to the city board of supervisors to work out the details and conduct an environmental and traffic review. (At last check, there were still some unresolved issues in this area.) Also, Lennar still hasn't signed a binding agreement with the city, meaning it could still abandon the project - or demand further concessions beyond the 720 acres of free land they're slated to get in exchange for building the $1 billion development. If nothing else, though, it gives the Niners a fallback option in its negotiations with Santa Clara - and as Jerry Reinsdorf has said, it's all about the leverage.
