Via RGJ yesterday: The developers of the downtown baseball stadium and if we’re lucky, the entertainment district, want The City to cough up a million dollars per year for 10 years to help them secure financing in this tough credit market to help get their entertainment district built within 24 months of the stadium opening in April, 2009. They cite cost overruns on the project proposal in addition to the tight credit market.
At least one thing doesn’t make any sense: commodity prices on steel and concrete are down right now, leading one to wonder where the cost overruns have come from to push this thing $20 million over budget.
Still, I commented on Downtown Makeover yesterday:
The City is into this for $18MIL in property tax rebates over a 20 year period and just had to borrow money from the sewer fund to meet its obligations to the RTC which would in turn help it meet its obligations to the developer of the baseball entertainment district. Those are the breaks, and it's understandable that the baseball developers would want to get moving on this second phase of the development which I assume is for the Mizpah block. In that case I'm not adamantly opposed to subsidies to get the second phase underway ASAP as the combined district will be a great draw for the downtown area but the terms of the agreement should be opened up with clear milestones identified for when the citicenter property would be turned over to the baseball developers based on economic conditions at the time (primarily related to the credit market) and performance of the second phase. By asking The City to put up in essence "good faith" money to help secure financing, The City is being brought in as an equity stakeholder, a highly leveraged one at that, and consequently deserves a little bit of leverage of its own. The baseball developers have shown no reason for distrust. That ballpark is well on its way to being completed in time. But with this new financial ask from the developers, The City is being put into a position greater than that of enabler, which is that of financier. Since this represents a change in terms of the arrangement as was agreed upon, the whole thing needs to be opened up to provide some indemnity for The City. Just my opinion of course.
The reasoning behind this idea has something to do with tertiary community benefit. The City is in the position of having to acquire the existing downtown transit center to turn over to the baseball developers. The RTC is in the position of getting ready to start a capital project, the new transit center, at a time when they claim to be $3 million in the hole on their sales tax receipts that subsidize the existing bus service, meaning up to 25% cuts. If The City owns the existing transit center indefinitely, they can offer RTC to keep the transit center open until sales tax collection picks up. The RTC can use the new transit center funds to keep the bus service afloat for a couple of years. The community benefits by getting a baseball stadium and adjacent new restaurants and bars and keeping its bus service at today’s levels until the economy comes back. When the economy comes back, the developer can finance the redevelopment of the existing transit center, and RTC can bond new funds for the construction of the new transit center.
Or they can just put phase 2 on hold for 6 months following the completion of the ballpark and see if the credit markets have begun to thaw by then. It’s possible that’s what will happen.
I am with you on this one Ken...a LOT of concessions have been given to the baseball folks...so much so there is little to give anyone else. At the same point in time how successful can a baseball stadium be without entertainment and food options around it?
It's a tough call...maybe they should wait a couple years to see how things pan out. Did you see the city council meeting today? IT was encouraging to hear Dave Aiazzi say getting CVS Pharmacy to open downtown is as important to downtown residents as baseball, if not more important.
Posted by: DowntownMakeoverDude | January 14, 2009 at 10:20 PM
Yup. Though it appears as though my assessemnt of the situation is totally off base. I didn't get to watch the council meeting today, was busy with work. But one thing got cleared up today very well for me. SK Baseball is the developer of the ballpark and the owner of the team. So they are correct when they say they will have the stadium finished on time ready for games. But to the public eye, that's not how it will appear, because there'll be a large chunk of the project sitting there in some unfinished state, hopefully better looking than what ended up under the bowling stadium, but still just sitting there. "The ballpark" to the casual observer, who doesn't read redevelopment blogs and doesn't watch city council meetings, will not be complete. To me, entertainment and food options around it means you have to actually cross the street to get to them. This is all onsite. Mind you, it looks great. I also think SOMETHING needs to happen to get it built out and filled with tenants ASAP. All the stuff I thought of as "Phase 2" and beyond is Herb Simon's responsibility, and we haven't heard from him lately. Interesting situation. I'll be paying the best attention I can for the next meeting where this comes up. Hopefully this won't be another press release & announcement a day before the meeting where the discussion is held. That's sure a great PR strategy.
Posted by: Ken Manz | January 14, 2009 at 10:25 PM