Are you ready for some (debate over) football?! Aldermen consider stadium financing plan
On the eve of a public hearing about the St. Louis Rams’ future in the Gateway City, members of the Board of Aldermen are mulling over whether they’ll pick up part of the tab for the cost of a new stadium. The NFL is hosting a meeting Tuesday night at the Peabody Opera House for the public to sound off on the Rams’ potential relocation to the Los Angeles area.
While Rams owner Stan Kroenke has said basically nothing of his intentions, the billionaire businessman unveiled a $2 billion stadium in Inglewood – which prompted many to assume that the Rams will soon apply for relocation.
(Similar meetings will occur this week in Oakland and San Diego, the locations of two NFL franchises that are also considering bolting to the Los Angeles area.)
With the Rams’ future up in the air, state and city policymakers have been pushing for a new stadium on St. Louis’ riverfront. The roughly $1 billion project would be funded with state, local and private funds, and is contingent on the Rams or another team agreeing to play in St. Louis. And after several weeks of waiting, St. Louis aldermen received a draft copy of what the city would pay for the facility:
- The city would issue about $70 million in bonds, which would be paid off over a roughly 35-year period. Then the city would pay between $5 million and $6 million a year in debt service through 2051, which amounts to a little more than $200 million when accounting for interest.
- The St. Louis Regional Convention and Sports Complex Authority would then use a recently signed naming rights deal as collateral of sorts to issue $75 million in bonds. Since naming rights deals are typically seen as team revenue, the city will rebate the team a percentage of “game day” taxes – such as levies on tickets, parking or merchandise.
- The Regional Convention and Sports Complex Authority, the entity that owns the Edward Jones Dome, would cover any cost overruns of the stadium.
Mary Ellen Ponder, chief of staff for St. Louis Mayor Francis Slay, said one of the reasons coming up with a bill “has taken so long and has been so complicated” is because the city has been trying to “make it so it’s a responsible finance plan that eliminates the city’s risk.”
“The first agreement that was leaked about a month ago had it so that the city was making two annual appropriations, which was not helpful – that put all the risk on the city,” Ponder said. “Whereas now all the risk is on the team. They have to generate revenues if they want taxes rebated.”
Ponder also said the percentage of taxes and the types of taxes that would be rebated is still under discussion. She added that the two-person task force guiding the stadium proposal “will spend a lot of time speaking with each alderman and telling them why this is the best deal for the city.
“We need to get something done by the end of the year. That gives us nearly nine weeks to get something done at the Board of Aldermen. Nine weeks is more than half of the length of time for the Missouri General Assembly,” Ponder said. “So I think that’s plenty of time for the aldermen to have a healthy debate on this issue and deliberate on the merits of it. And I think at the end of the day, the aldermen will realize this is the right thing for the city and the region.
“And we’ll get to the end zone,” she added, with a laugh.
The stadium funding plan is expected to go before the Board of Aldermen in the coming weeks and will need 15 votes in order to go to Slay’s desk.
St. Louis Public Radio contacted a number of aldermen to get their initial take on the proposal. Some – including Aldermen Antonio French, D-21st Ward, and Joe Vaccaro, D-23rd Ward – were either still reading through the plan or hadn’t spent enough time examining the proposal to provide a definitive reaction. (Both elected officials are on the Board's Ways and Means Committee, where the stadium funded bill will likely be assigned.)
Others such as Alderman Jack Coatar, D-7th Ward, were more enthusiastic about the proposal. Coatar’s ward includes most of Downtown St. Louis, which he says could see benefit from the project.
“There’s certainly going to be people who will argue that no expense of any tax dollars for this project is appropriate. And I get that,” Coatar said. “But in reality, we’re talking about an investment of the city … that is going to allow us to bring a billion dollars worth of construction projects and put a lot of people back to work and revitalize a very blighted area of the riverfront that has had decades of disinvestment and is 90+ percent vacant.
“After looking at the sort of broad numbers that we’ve been provided, this is something that I’m certainly going to be supportive of,” he added.
Others, though, said aldermen would need more information to make an informed decision. Tom Shepard, chief of staff for Board of Aldermen President Lewis Reed, said an “important factor is what we determine reasonably to be the amount of tax revenue coming in” because the stadium is built.
The plan is good “if we’re going to get $20 million revenue from the [stadium], and we can give 50 percent of that back and we’d still be getting $10 million to cover our $6 million payment,” said Shepard, speaking in hypotheticals. “But if we’re only going to get $4 million in tax revenue and we give away 50 percent, then we only have $2 million to cover our $6 million in payments. And right now according to the budget director, the Rams … right now are bringing in $4.2 million a year in tax revenue.
“We’re locking ourselves into a certain amount of our payment and we’re locking ourselves into a certain percentage of rebate,” he added. “We can’t really make a decision on that without having a reasonable estimate on what the tax revenues are going to be.”
In response to that concern, Ponder noted that the tax rebate would only apply to NFL games. In other words, if a non-football event occurred at the new stadium, the city would get to keep all of the taxes that emanate from a particular soiree. “So when we talk about rebating taxes on game day events, it’s game day events – not all the other events that take place there,” she said.
Another source of tension is the fact that aldermen – and not city voters – are making decisions about stadium funding. That’s the take of Alderman Christine Ingrassia, a 6th Ward Democrat is co-sponsoring Alderman Megan Green’s bill to make any public assistance for the project contingent on voter approval.
Ingrassia said many of her constituents “are mostly very concerned and upset that they do not have a vote – and not happy with the way things have been handled to date.” And with a couple of exceptions, she added, most people pushing her to vote in favor of the stadium are “residents in the county.”
“I don’t see county residents pushing their council members and [St. Louis County Executive] Steve Stenger the way those county residents are pushing us,” said Ingrassia, when asked if there was a tangible difference between her position on the stadium and Stenger’s. “In fact, I’ve received messages that have kind of taken me aback a bit. [They’ve said] ‘we live in the most dangerous city in America and I really don’t think you want the entire football community mad at you.’ Or ‘I’m going to do everything I can to find someone to beat you in your next race.’”
In many respects, Green’s bill may be a barometer of how skeptical the board is about funding the stadium – but it may not have a clear path to implementation since Slay could veto the measure. Ponder said “a veto is always an option, but it’s never taken lightly.”
But the fact that St. Louis County won't be providing funding for the new stadium was emphasized by St. Louis Comptroller Darlene Green, who said in a statement on Monday afternoon that "all parties involved in negotiating the funding of a new riverfront stadium should keep in the forefront what the terms will mean to city taxpayers and to the city's credit rating."
"St. Louis city should not be asked to shoulder the burden of the funding gap that was created when St. Louis County was given a pass for its share in building a new stadium," said Green, who contended that the new funding structure asks city taxpayers to pony up $10 to $12 million annually. "When analyzing the risks and benefits, I reiterate that all funding partners should share equally in bridging the funding gap and minimize the burden to city taxpayers.
"I can support building a new stadium and retaining a NFL team as long as that desire is balanced with community-building, public safety and other financial commitments," she added.
For what it's worth, Stenger was not necessarily opposed to the St. Louis County contributing to the new stadium -- but was adamant that county voters have the final say. Gov. Jay Nixon's office ultimately decided that, according to Stenger, "that St. Louis County’s participation in the new stadium would not be necessary financially. "
Elephants in the room
While there appears to be a lot of high drama over whether the Board of Aldermen will back a stadium funding plan, it’s not necessarily the only obstacle ahead for the project.
After all, Missouri lawmakers from both parties have threatened not to appropriate money to pay off state bonds for the stadium project if they’re not first approved by a statewide or legislative vote. And it’s also possible that enough NFL owners will approve Kroenke’s bid to move his team.
Then there’s the scenario that was broached a few months ago by St. Louis Magazine’s Ray Hartmann: The stadium deal is predicated on the NFL and an NFL owner contributing about $450 million for the project, along with money from the state and personal seat licenses. Even if NFL owners block Kroenke’s Los Angeles push, it’s an very open question if the taciturn billionaire will want to chip in for a stadium in a city he appears intent on leaving. Under that scenario, he may have more of an incentive to simply stay in the Edward Jones Dome.
For his part, Coatar said one of the benefits of this deal compared to one that spawned the Edward Jones Dome many years ago is “none of this happens without significant private investment from both the NFL and our owner of a football team, whoever that may be.”
“If he doesn’t move or isn’t given a new team or isn’t allowed the option to buy a new team, he’s just going to stay put,” Coatar said. “And he has the option to just continue playing in the Edward Jones Dome and continuing his one-year lease. I don’t know if he’s going to do that. None of us do at this point. In an ideal world, we’ll either get Stan Kroenke to recognize the value of St. Louis or we’ll get a new owner for the Rams or another team.”