Updated: MDJ Gives Cobb’s Financing Plan For The #Braves Stadium

The Marietta Daily Journal is tweeting out the details.  They as you recall are the ones that scooped EVERYONE on this story Monday.

According to them, the financing from Cobb will look like this:

1) Existing Hotel/Motel Taxes from Cobb’s Portion: $940,000

2) Property Tax Revenue from General Fund (but no increase in millage rate): $8,670,000

3) A new 3% rental car tax to be approved by the Cobb County Commission: $400,000

4) Additional $3/night “special services fee” for Cumberland area hotels, $2,740,000

5) Cumberland “Special Services Tax District” additional property taxes (roughly the Cumberland CID) $5,150,000

If I’m doing my math correctly, that’s an annual taxpayer contribution of $17,900,000.

The AJC is reporting that Cobb’s contribution is worth $302M.  That amount financed over 20 years at 2% muni-interest comes out to about $19.6M per year.  So the numbers are “close”.

But go back into item number 2, as that is where opponents will focus.  While not “increasing” Cobb County homeowners taxes, it will take less time than it did for me to write this post then it will for some Cobb residents to ask if there’s an extra $8.7 Million in Cobb’s general fund budget, why aren’t we cutting taxes rather than building a new home for the Braves.

Updated: Full details here, an not behind MDJ’s paywall:

Update: Here’s the doc from Cobb County with the full outline.

 

38 comments

  1. griftdrift says:

    One of Cobb’s talking points is it will not affect 95% of the residents (although see Charlie’s part about money coming from the general fund, so not sure how that works)

    You don’t normally see politicians of the Cobb County stripe pitting the 95% against the 5%. What special circumstances we must be in.

    • heroV says:

      Seems like they can say that property taxes will not be increased on the 95 percenters as a direct result of the financing arrangement. However, with so much cash coming from the general fund, taxes have to be increased at some point down the line or county services have to be degraded by that amount.

      • Charlie says:

        You’re likely to also hear the case for “growth”. Most of Cobb didn’t fare as bad in property tax reassessments when the bubble burst, and all but South Cobb is seeing some fairly healthy increases in home values over the last couple of years. My gut is they’re expecting the value of the overall digest to resume a healthy upward climb.

          • Charlie says:

            Therein lies the rub. While we’re talking 20-30 year terms, the real risk in the budget is the next 5-7 years as over time this fixed debt service becomes a smaller part of a growing budget.

            But if the economy tanks in the next 24 months again (as interest rates are expected to increase which would put pressure on home prices), this could put real strain on Cobb’s budget, likely during the terms of those who would have to vote to approve this.

    • mpierce says:

      The quote I saw was:”without a tax increase for over 95 percent of Cobb County residents” which is a little different from “will not affect 95% of the residents”

      Hopefully the $300million number will be more accurate than the $200million Falcons figure.

  2. The 3-day furlough inflicted on Cobb County teachers a few weeks ago is expected to save about $9 million – or roughly the same amount Cobb will need from the general fund for the Braves. Hooray for priorities.

    Also, $3/night for “special services” at a hotel? What sort of pit of iniquity is Cobb turning into?

  3. Al Gray says:

    From the article:

    Stadium Design and Construction. The Atlanta Braves organization will serve as the design and construction manager for the project. The Atlanta Braves will be responsible for any cost overruns.

    HA! The final ‘budget’ will be determined as the design – controlled by the Braves – is completed, or more likely nears completion. So the “cost overruns” will be probably be bench-marked as costs over the final budget that the Braves control via their control of design.

    This is SOP when selling stadium projects. Years later, after 30% to 45% “cost overruns” measured against the original hyped “cost” are known, the public is outraged, not realizing they were shackled to paying costs far in excess of those advertised from the start.

    There is no hard cap on public costs, in this deal, is there?

    Hopefully this is not a “thread-jack”, but if $18 million in annual public payments over 35 years are a $300 million public contribution to the Braves from Cobb County, how is it that $20 million over 37 years from Atlanta to the Falcons is only $200 million?

    BTW, the Falcon’s commitment is to fund cost overruns over and above a “Guaranteed Maximum Price,” also which will be based upon a design that the team controls. (Unless the final deals with Atlanta differ from the Term Sheet agreed upon by Falcon’s Stadco and Georgia World Congress Center.) Not only that, Atlanta has to incur off-site costs that can be dictated by the Falcons’ on site design.

    What the public and the naive Atlanta business media think is a ‘cost overrun’ isn’t a ‘cost overrun’ under these very typical stadium agreements. The $200 million announced cost increase recently announced for the new Falcon’s stadium is a perfect example. When you control the design like the Falcons and Braves do, it is you who decide when and what a “cost overrun” is.

    These facts can mean $50 million to many $100’s of millions in shifted costs.

    It happens all the time on public projects. It is all nice and legal, too. Is ignorance bliss in Atlanta and Cobb?

    • heroV says:

      Interesting. So are you saying that the $200M cost increase for the Falcons stadium is going to have to be covered by the taxpayers and not the Falcons?

      • atl_man says:

        Two totally different financing structures. Blank was upfront about only wanting a specific amount from the city and would cover the rest. (Actually, Blank was going to build the entire project on his own and the GWCC approached Blank, offering the $200 M as well as an idea for a larger facility and a better site.) So, where the Falcons’ stadium was Blank’s project but with the GWCC paying Blank for picking a downtown site, the Braves’ stadium is a public-private partnership (with Cobb picking up a majority of the tab) from the get-go.

        That is what makes Blank’s being willing to cover cost overruns more likely. He is getting a better facility and a better location than he was when he was planning to go it alone, and even with the added costs he will still wind up paying the same amount of money – or only slightly more – anyway.

        • Al Gray says:

          The documents Atlanta executed with respect to the bonding say that the bonds shall not be less than $200 million. This is hardly saying that they are capped there. The consultants of the GWCCA put the funding stream north of $350 million IIRC, given various scenarios. The principle one, growth in HM tax revenues, greatly exceeds those assumption. (The interest rate environment seems to be slightly offsetting the revenue increase, however.)

          The funds over and above the $200 million are worth more than $100 million at present value if you can believe the consultants reports and those go into operation and maintenance accounts, plus a large pot to host other events – those that the Dome profits used to cover.

          The $200 million funding cap was and is highly questionable.

      • Al Gray says:

        I never saw any documents that changed the term sheet, which basically said that construction costs were to be paid from the proceeds of the hotel motel tax and sale of seats rights, that the Falcons pay for cost overruns, that overruns were relative to a Guaranteed Maximum Price, and that GWCCA approves the selection of the design team, whom the Falcons control. I am not an attorney, just somebody who has encountered loosely worded major construction contracts for 3 decades and had involvement in dealing with the aftermath.

        Upper management in the private sector gets regularly fooled by the term “Guaranteed Maximum Price” so one can sort of excuse politicos for pushing a concept of “cost overrun” protection that varies wildly from the reality of the contract documents. The ones truly blindsided are the public.

  4. Three Jack says:

    wwbbd – What Would Bill Byrne do? Elections have consequences…I doubt we would even be discussing a Braves move had Bill won. Chairman Lee deserves credit for orchestrating a big win for Cobb County.

    • notsplost says:

      Let’s let history play out before we jump to that speculative conclusion.

      It looks like a win now, but I want to reserve judgement until we see the true details of the financing (re-allocating property tax revenue sounds like someone is going to end up losing.)

  5. George Chidi says:

    I read this as saying that Cobb County is going to shift $9 million a year in existing tax revenue to finance the bonds. Which is to say they’re baking in a $9 million a year tax increase later for something else. They won’t raise taxes for the stadium, of course. They’ll raise taxes to cover the school deficit, or to expand medical services, or something else that they could have used these “shifted” taxes to cover.

    That $9 million represents about $35 a year, per household, in increased property taxes. That’s roughly a property tax increase of 2 percent on the median property tax bill.

    But that’s not where the real cost lay. Start with 81 home games. Assume about 48 of those are weekday games, and three-quarters of those happen at 7 p.m. 36 home games at rush hour.

    145,000 people in Cobb County commute to Fulton, DeKalb or Gwinnett. Let’s assume about 30 percent of them hit the road at rush hour — about 40,000 people trying to get to Marietta between 5 and 7. To which you are now adding another 40,000 people going to a game, 36 days a year.

    I’m betting that adds a solid 30 minutes to everyone’s commute on game days.

    Median income in Cobb is about $60,000 a year, or $30 an hour. 30 minute commuting delay times $30 an hour times 40,000 people times 36 days a year. That’s a productivity loss of $21.6 million a year.

    Let’s hear how they’l mitigate that loss.

    • Al Gray says:

      Exactly.

      George, over this way we have been looking at the impacts of a local government maxing out its 10% Tax Allocation District valuation. Essentially property owners in 90% of Augusta find themselves paying for the growth in services costs in the TAD areas and other property owners in the TAD not beneficiary of TAD project improvements have a property tax floor. From what I read, Cobb has maxed out its TAD capability as well. With the existing TAD tax shift and the CID tax going to the stadium to the tune of $5 million a year, this will be a 1-2 punch if you are a Cobb taxpayer.

  6. CJBear71 says:

    They aren’t shifting $9 million in “tax revenue” – this is shifting $9 million in General Fund expenditures. Either they have been increasing their reserves by $9 million each year (and if so, why haven’t they given it back to the tax payers through a millage rate decrease?) or they are going to squeeze some of the services they now provide in order to fund a private sports stadium.

    • krislikesmath says:

      Agreed. Why should I pay for a baseball stadium that will worsen my commute and worsen county services.

      Any other Cobb Residents angry over this? Money is being stolen from the population and in effect given to a corporation for a nicer baseball ‘house.’ I didn’t know this was ‘Robb County’ because they’re robbing Peter to pay Paul.

  7. Ellynn says:

    The “beauty” of pulling bonds is they can be included in a future SLOST. Stay with me here…

    1. Finace a projects on a local bond even though in 2-5 years will be a hard to fully cover.
    2. Hold the bond for a few year until the next SPLOST
    3. Add the “cover existing Bond debt to your SPLOST wish list along with a whole list of other unpopular goodies’
    4. State in pro-SPLOST statement that voting yes for pointles goodies also prevents the bond debt from increasing your taxes.
    5. You vote Yes to SPLOST to “save” your taxes and special interst groups get new pointless goodies.

    • Dave Bearse says:

      I think it’s conservative to estimate that 2/3 of the Cobb County cars rentals are by Cobb County residents. Hotel/ motel tax revenue, like property tax revenue, are funds currently directed elsewhere for services and promotion that will discontinued. Much of the sales and revenue of Special Services Tax District businesses comes from Cobb County residents, so a significant chunk of that $5M contribution will come out of Cobb County resident’s pockets.

      A $12M Cobb County residents contribution is only $15 a year per Cobb County resident. $30 each tickets for a family of four attending one game a year effectively increase to $45 each, assuming of course there’s no new ticket taxes or ticket price increases further inflating ticket prices. It’s an outing that will cost a nearly week’s pay for the likely/mostly minimum wage concessionaire and parking attendant jobs that go with the new stadium. Good deal!

    • heroV says:

      Does anyone rent cars in Cobb County? I guess if your car is in the body shop and you need a temporary replacement, you might use a rental. That burden would seem to fall largely on Cobb residents rather than visitors, though.

  8. South Fulton Guy says:

    When $8,670,000 is pulled from the General Fund, doesn’t that mean $8,670,000 in other services is cut or if these are surplus dollars, why weren’t $8,670,000 returned to taxpayers through lower millage rates?

  9. MattMD says:

    Has anybody thought about the potential economic benefits of this development? We all seem to be talking about the current expenses. We have a glorified suburban bedroom community land a MLB team, that strikes me as significant.

    Gwinnett just got a four-year school ten years ago unless I’m mistaken.

    • btfried says:

      There will probably be some economic benefits, but it’s virtually a consensus in economic development that sports projects tend to produce benefits less than their costs. Most of the new jobs created are going to be low wage and the stadium probably won’t have a huge impact on property values. A few new businesses (like bars and restaurants) will probably open up around the stadium, but there’s always the huge concern that those businesses will do well during baseball season, but then suffer during the off-season. IMHO the best case is that Cobb generates a few million to help offset the cost, but will still lose money.

    • George Dickel says:

      While technically accurate that it is not inside the Atlanta city limits, I think it’s a little disingenuous to call the specific area in question a “glorious suburban bedroom community.” More people work than live in the specific zip code in question.

      True suburbanites think the Cobb Galleria area is Atlanta, anyway.

        • atl_man says:

          If the “Atlanta mindset” valued the Braves they wouldn’t be leaving in the first place. Atlanta is populated by blacks who prefer basketball and football, and hipsters who prefer biking and hiking. Had this been the Falcons’ leaving, there would be a ton of weeping and screaming. But since it is the Braves, the only thing that will be missed is the tax revenue.

          And the “bedroom community” thing is legitimate. The reason – and was mentioned prominently by Reed in his comments – is that the suburbs have been content to let Atlanta do the heavy lifting by offering the key institutions and infrastructure that a large urban area needs while they kick back and depict themselves as low tax, pro-business havens absent all the problems associated with the very urban centers that are the reason for their existence to begin with.

          Even now, the Braves have taken pains to make it clear that they are not moving to Cobb County by choice. It is being done solely for economic reasons, and if they could make the same amount of money by staying in Atlanta, they’d do it. (And they are also feeling slighted by all the attention that the state and city lavish on the Falcons. Big deal. The Hawks go through the same thing. So the Braves get to go to where they will be the crown jewel and the apple of a local government’s eye. More power to them.)

          But Cobb will still be a bedroom community after this. They’ll just be a bedroom community with a baseball team, no different from lots of other suburban areas with sports teams, which curiously DO NOT rename themselves after the suburban area. If Cobb wants to be known as more than a bedroom community, then they will have to do what Reed suggested they do, which is quit trying to get free stuff by being “not Atlanta” and create their own institutions and infrastructure, so instead of living off ripping off downtown and the urban core they can build and attract things of their own.

          Paulding is poking around building an airport. Good for them. But had the bedroom community folks put an airport in north Cobb and connected some sort of transit to it (light rail or BRT) 20 years ago before real estate prices shot up and development got so dense, they wouldn’t be a bedroom community anymore, the Braves would have moved out there years ago, and that is where the Falcons would be headed now even without the $200-$350 million from the GWCCA. Sitting around benefiting from the investments that other people make – and bashing the people who make the investments as welfare queens and corrupt incompetent poverty pimp criminals – isn’t conservatism.

    • smvaughn says:

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