$100 Million Less In Taxpayer Funds To New Stadium? Maria Saporta Pulls A Lee Corso With A “Not So Fast…”

February 4, 2013 10:33 am

by Charlie · 19 comments

So, there are multiple reports that the Falcons are willing to accept only $200 Million in bonds (down from $300M) backed by Atlanta’s hotel motel tax to get this deal done and moving.  So, the taxpayers have saved $100 Million from the previous deal, right?  Well, as Maria Saporta reports, not so fast…

Now here is where it gets interesting. Under the GWCCA-Falcons agreement, if the hotel-motel tax generated more than the estimated $300 million, the excess taxes would go into a “waterfall” fund that would go to pay for other debt on the project, or go into a refurbishment and maintenance reserve account, or go into a fund for capital improvements.

So whether the state provides $200 million or $300 million in bonding capacity, the amount of hotel-motel taxes collected remains the same. In other words, it does not mean that the Atlanta Falcons would be putting in another $100 million into the stadium project. All surplus hotel-motel taxes would still be invested in the stadium development.

Continue to watch this deal folks.  Regardless of what PR reports and various headlines say, the contribution from taxpayers appears to continue to be well over the $200M or even the $300M that most are being fed and reporting.

Spacey G February 4, 2013 at 11:19 am

Driving over City of Atlanta’s shoddy streets is pretty much like going over a “waterfall” – for one’s car.

IndyInjun February 4, 2013 at 11:40 am

The Atlanta Press is totally pathetic, isn’t it?

Nonchalant February 4, 2013 at 12:32 pm

And of course the Cyclorama will rot due to lack of money. But that painting only commemorates men who fought for their nation and for great ideals (and for some, in addition, a not so great ideal).

This valor and sacrifice pales in significance besides the need to get to a Super Bowl. Forward!

seekingtounderstand February 4, 2013 at 5:18 pm

Do you think the city of Atlanta would give the Cyclorama to Savannah or Gainesville, GA
Art students could repair it and it would provide a great tourist feature for the Gainesville Square or Savannah Art School has plenty of empty space in walkable areas.

novicegirl February 4, 2013 at 4:13 pm

I think the amount of people staying in Atlanta hotels to use the Georgia Dome and Congress Center facility dwarfs anyone here to visit Cyclorama. While I’m a fan of the Cyclorama, and hope they come up with an idea to keep it going, I believe it would be a difficult leap to put the renovation bill on Atlanta’s conventioneers and hotel guests.

Nonchalant February 4, 2013 at 4:35 pm

I was actually thinking of the AJC article* that forecast visitor amounts if placed in different locations, and if moved from Grant Park they apparently would be more substantial, as makes sense.

As far putting the bill on the visitors to the city–I simply posit that using a tax on tourists to fund a renovation of a tourism site is an appropriate use of this tax on tourists.

***Naturally, I do not subscribe, not wishing to give aid and comfort to, well, you know. From time to time I chance to come across someone else’s subscription.

novicegirl February 4, 2013 at 5:58 pm

I don’t know if moving it will help much. I guess next to World of Coke and Aquarium would generate more traffic. To be clear, I wish we lived in a time where more folks got excited about history, but regardless of where Cyclorama is located, the Dome will always generate more overnight stays in Atlanta.

Dave Bearse February 4, 2013 at 9:29 pm

The stay in hotels for the Dome may dwarf the stays for Cyclorama, but likewise the total stays in Fulton County hotels dwarfs the number of stays for the Dome. We’re probably talking low single digits percentage of hotel stays connected with visitors to the Dome, given there are north of 80,000 hotel/motel rooms in metro Atlanta, and say on the order of 30,000 rooms in Fulton County, and what, two-three dozen Dome events a year with any significant hotel stay element.

analogkid February 4, 2013 at 8:24 pm

Under the GWCCA-Falcons agreement, if the hotel-motel tax generated more than the estimated $300 million, the excess taxes would go into a “waterfall” fund that would go to pay for other debt on the project, or go into a refurbishment and maintenance reserve account, or go into a fund for capital improvements.

Serious question: Is the rate of the hotel-motel tax set in stone or can it be increased/decreased based on the revenue generated? If it can be changed, then any overages should be temporary, assuming it is managed correctly.

Charlie February 4, 2013 at 11:28 pm

Without a change in GA law, it is fixed until 2050.

analogkid February 5, 2013 at 6:27 am

Thanks. I would agree that that’s a problem then.

griftdrift February 5, 2013 at 7:17 am

Well I heard once that laws can be changed. Right Charlie? :)

Charlie February 5, 2013 at 7:51 am

They absolutely can. That wasn’t the intent of the question. And the way they are currently written, there doesn’t appear to be an intent to change that law to prevent less than the $200 or $300M to go directly to the Falcons organization.

bgsmallz February 5, 2013 at 9:56 am

One point here…the % of the hotel/motel tax going to the GWCC for stadium purposes has been the same since 1989. So, Charlie’s right that they can change the law…but you’ve got a 24 year(!) old revenue stream that by most accounts has been pretty successful in accomplishing its purpose…think about that, we are talking about a government backed project that has actually worked. (I hate to mess with that kind of karma) If you change the law to fund other ‘priorities,’ you are going to have to go back to the legislature in the future funding for repairs, upgrades, and operational costs for the Dome to keep it competitive as a facility, right?

Our legislature has been really good at identifying places where we need to spend money and providing effective funding for those expenses. I’m<-sarcasm.

Charlie, you and I certainly differ over whether this is a good use of these revenues…but I assume we both can agree that this wouldn't be a simple change in the law. You've got 24 years of precedent along with a messy separation of state/local priorities if you attempt to alter the revenue distribution. What you are talking about (changing the disbursement of the hotel/motel tax) seems pretty difficult to accomplish…that doesn't mean your argument fails, per se. However, when predicting the successful outcome of your proposed change in the law, degree of difficulty has to be included.

Long comment ahead…

First, you're talking about the state changing the law so that local governments(Fulton/Atlanta) stop funding state owned operations and property and instead fund their own local improvements. That seems simple enough (although…the day the state gives money back to the city of Atlanta (or vice versa) will be the day I buy a lottery ticket). (I don't think the state can just take that local money and spend it wherever it wants…)

Second, you have to trust the city of Atlanta and Fulton Co to spend that additional revenue stream in a manner that generates regional economic growth through infrastructure, etc instead of just patching holes in other spots of their operational budgets. (Again, degree of difficulty here is high)

And Finally…you take that money away from the GWCC and there is no money to fund improvements, repairs, and the operational costs of the Dome…unless you go back to the legislature and ask them to fund it from the state's general fund. (or you ask the city to pony up more money) How unlikely a scenario is this, really? So the state kills the new stadium deal and tells the city that it isn't allowed to spend its money on that project. The city is freed to use its hotel/motel tax somewhere else on other 'priorities'. The Falcons build a new stadium somewhere else (or move) using their own $700M because the state refuses to put any public money towards a new building or renovations of the Dome. Now, it's 2023 and the state is on the hook to fund the Dome in order to keep it competitive with buildings in other cities (and a new Falcons stadium) and we are to believe they will fund the needed repairs and such from the general fund?

That's one of the points I think that gets glossed over by the 'no funding' crowd. This is a venture that has been reasonably effective and painless to most taxpayers in the state. We don't have many publicly funded success stories…especially when you are talking about city/state partnerships..but the Dome is one of those. It's not unreasonable to consider that past…and the murky future of the alternatives…when deciding whether this is something that is worth doing or not worth doing.

Oh…and I love Peach Pundit and Georgia is great! (Please don't put me on probation!)

bgsmallz February 5, 2013 at 10:25 am

That was really long…sorry. Hopefully, it was well thought out.

By the way, it’s worth reading the term sheet on the waterfall payments the article describes. Maria is dead wrong on how she loosely describes where the amounts may go(just as she often is about such things)…there are caps and specifics. First obligation is servicing the debt…whether its 200M or 300M. Once the debt is fully serviced, the state owns the building and property.

After the debt is serviced, the hotel/motel tax distribution will flow to the following other spots…$2M per year (escalating by 2%) in a limited refurbishment account. (That sounds like a pretty typical ‘landlord funded repairs’ account)…the other place the funds can go is more interesting. Up to $10M per year to the NSP Renewal and Extension account maxing out at $100M. The term sheet contains language about three 5 year renewal terms to the license agreement. I think that is a key point on how this looks in the final analysis. If the state/city have pre-negotiated the amount of public funding to the improvements required in order to trigger 15 years of renewals, that is a much better deal for the taxpayer than going to the bargaining table in 20-30 years with a new owner that could be less inclined or committed to the Atlanta are.

Having said that…I can’t imagine that the tax would generate enough revenue to fund the bonds, the annual repair fund, and $100M towards the Renewal/Extension fund…but IMO it’s smart thinking to put that overage away for the future instead of allowing it to roll off into general spending that doesn’t look long term.

IndyInjun February 5, 2013 at 10:38 am

Ms Saporta nailed it. I have been working on the main points that show that the funding claims are misrepresentations and the waterfall was one of the central elements.

I cannot speak for the other “opponents’ but I am not rejecting the project and public funding outright, I just think that proper analysis can reduce the public’s share by several $hundred million.

Hey, we already have stonewalled this ‘done’ deal down by $100 million! Let’s show Georgia what some bloggers can do!

Charlie, in an earlier post on the stadium topic you said folks in authority don’t pay attention to this blog. I think you sell PP and yourself short, because GWCC has a link to one of the earlier stadium articles that contained our pretty heated debate.

Charlie February 5, 2013 at 10:44 am

I’d like to see the quote where I said they don’t pay attention. Quite the contrary, we as a blog were invited to talk to Director Poe and his team about this. Three of us went, each having a different opinion about the stadium.

I’ll also remind you that you haven’t show the cards as requested as to what you find specifically objectionable about this terms sheet. You like to say you’ve done a lot of research and tell us your conclusions, but you have yet to point to the exact parts/language you used to reach these conclusions. If you will do that, I’ll ask Mr. Poe for his response and we can elminate much of the confusion and understand where this money does and doesn’t go.

IndyInjun February 5, 2013 at 10:54 am

Just about time I was ready to pull the trigger on that, the deal got thrown over to the City of Atlanta, and I did not revisit it, as there is another large public project for which my presence and assistance was commanded. That one is a tarbaby and I got some public official sort of dependent upon me.

It steamed me to get scooped by Ms. Saporta, but reading the term sheet for about the 5th time eliminated some points while bolstering others. The transfer of bonding to Atlanta opens another can of worms.

bgsmallz February 5, 2013 at 11:27 am

What scoop?

The formula setting forth the amount of hotel/motel tax being sent to the GWCC has been set for 24 years. The term sheet has always defined, specifically, where that amount can go. And, by the way, there are caps in the waterfall funding buckets. (details)

Changing the amount to be bonded isn’t about changing the funding from the tax…it’s about changing the funding to the construction of the new building. It changes the amounts in each bucket.

It’s two separate issues(funding construction and funding the GWCC), and frankly, it’s an issue that I have yet to see a ‘no new stadium’ person take a clear position on.

39.3% of the hotel/motel tax has been dedicated to the Dome since 1989. (it’s worth pointing out that places like Sandy Springs, Johns Creek, etc. have effectively opt-out, I think(?)) If the new stadium doesn’t get built, how much of that % goes to other “priorities” and how much continues to pay for the Dome and the GWCC? You can’t effectively analyze opportunity costs without having an answer to that question, but I don’t think I’ve ever seen anyone actually articulate a position on that.

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