.10/19
A recent Spurs mailer arguing for a new arena downtown shows a smiling young fan beneath the slogan: “Meet the New Landlords.” Taxpayers will pay “$0!”, the flyer touts, while the Spurs “pay rent” and the public “owns the arena for generations.”
But what landlord spends $1 billion to collect just $4 million a year in rent over 30 years — and agrees to fund costly mid-lease renovations? And by the end of the lease, history shows, taxpayers will likely be left with an “obsolete” depreciated building requiring ever-more subsidies.
You can love the Spurs and still hate this proposed arena deal before voters; it’s a bad deal made worse by the unnecessary rush, the hard-sell and the misleading marketing. Taxpayer-funded arenas almost never deliver promised economic gains, but we can and should demand a deal that is transparent about costs and benefits, so that voters can make an informed choice.
Proposition B would dedicate $311 million from Bexar County to help fund construction of this new downtown arena. If passed, the city of San Antonio will add $489 million, plus the cost of land and infrastructure, for an estimated public contribution of over $1 billion.
The county’s $311 million venue tax may rely mostly on tourists, but it’s still public money. After public input, the last venue tax election funded the Tobin Center, Mission and Museum Reach, and youth sports complexes such as Mission Concepcion, McAllister Park Little League, S.T.A.R. Soccer and Northside Swim Center. These are facilities that serve residents and attract steady tourism through competitions. This time, there was no public process or economic analysis, just a rush to the polls.
Multiple flyers supporting the arena claim it will not be funded by property taxes. But more than half of the city’s $489 million arena debt would be financed by the HemisFair Tax Increment Reinvestment Zone, known as TIRZ, plus ground leases and the team’s annual $4 million rent. Another $60 million from the Midtown TIRZ is proposed to buy the land — a cost omitted from the $1.3 billion price tag and the city’s contribution.
TIRZ revenue comes from property taxes, not tourist taxes, and ground leases and rent would normally also go to the general fund. Redirecting them to arena debt creates real costs for residents by diverting funds from police, fire, parks and streets, and shifting those costs to taxpayers outside the zone.
The Midtown TIRZ is mature and now generating $12 million annually. Using this money to buy land is no different than pulling it straight from the general fund.
Visitors do pay most of the state hotel and alcohol tax — the Project Finance Zone revenue or PFZ — proposed to finance the remaining 48% of the city’s debt. But it does not have to fund arena debt. It could pay for the infrastructure the arena requires — parking, streets, bridges, transit, even nearby parks and retail.
Instead, the city proposes a separate $250 million bond — debt paid by property taxes — to build that infrastructure. This debt will consume about half of the projected 2027 bond capacity and crowd out citywide needs.
And while unused tax would revert to the state’s general fund, most state spending supports schools and health care. Using the PFZ for an arena just furthers the state’s policy of subsidizing pro sports at the expense of core services.
The Spurs have promised $1.4 billion, either from their own money or others they identify, in nearby development. But the development is undefined and the “guarantee” practically unenforceable. If they don’t deliver, the only remedy is for the city to walk away from the deal. Given the sunk costs and the boosterism from city employees and elected officials, that seems unlikely.
The Spurs have guaranteed the portion of the bond payment backed by property tax, but that’s not enough to ensure development, particularly since it can be refunded if “excess revenue” appears. That means the Spurs get paid back the cost of breaking their “guarantee” before taxpayers pay down debt or see a dime of return. In any normal business negotiation, that would be unacceptable.
The only arena economic analysis, paid for by the Spurs, estimates the public’s $800 million share would create just 114 new permanent jobs, with most income gains going to Spurs players. The city would net only $474,000 a year in new tax revenue, hardly a great return on a $489 million investment.
The report notes that the county loses money.
Other cities have done better. The Golden State Warriors and the Los Angeles Clippers financed arenas privately. Sacramento, Detroit and Milwaukee — a smaller market than San Antonio — kept the public share under 50%, versus roughly 62% here.
Oklahoma City taxpayers are funding a larger share, but getting a much less expensive arena, making the public cost close to the same. Miami-Dade secured $117 million in naming-rights revenue; Orlando captured income from naming rights, suites and non-team events.
We can do better, too.
A “No” vote on Proposition B isn’t anti-Spurs — it’s pro-San Antonio. It tells city and county leaders to negotiate a deal worthy of the city we want to be. The Spurs still have seven years left on their lease. A fair partnership, built on respect not a shakedown, and facts rather than spin, is still possible— but voters must first reject this one-sided deal.
Susan Strawn is an attorney and former federal prosecutor.
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