Bonds likely to fuel cross-bay ballpark move by Tampa Bay Rays
After more than a decade negotiating for a new baseball stadium, Florida’s Tampa Bay Rays know where they want it to be.
Neither the team nor officials with the city of Tampa and surrounding Hillsborough County, though, can say they know how to pay for the Major League Baseball stadium or the land, though bonds feature in preliminary discussions.
The Rays announced on Feb. 9 their plans to move to Ybor City, a Tampa neighborhood adjacent to the city's downtown, about 24 miles northeast of their current home at Tropicana Field in St. Petersburg.
“The Ybor site was chosen through a collaborative, cooperative process with Tampa and Hillsborough County leadership,” said the team’s principal owner, Stuart Sternberg. “This is where we want to be playing.”
Officials, who have negotiated with the team in private, have said they want any stadium funding plan to create the least burden on taxpayers.
They said various funding mechanisms such as tax increment financing and special districts such as a local Community Redevelopment Agency could be used to issue bonds to fund a facility that could cost upwards of $800 million, according to some estimates.
Two prominent local businessmen involved in negotiations to lure the Rays to Tampa - Chuck Sykes, chief executive officer of Sykes Enterprises, and Ron Christaldi, a partner at Shumaker, Loop & Kendrick LLP – formed the nonprofit SC Hillsborough Corp. last August to purchase options on 14 acres of property in Ybor City. The cost of the land has not been released publicly.
Sykes and Christaldi also formed a privately funded nonprofit organization to launch the Tampa Bay Rays 2020, a movement to bring the team to Ybor City that includes a website where supporters can sign a petition.
Getting public buy-in for the MLB stadium before knowing costs or purchasing land is not uncommon, according to Randy Gerardes, director of municipal securities research for Wells Fargo Securities LLC.
Public support campaigns are “not atypical for professional sports franchises particularly in this environment where there’s increased scrutiny to these projects because of increased austerity,” said Gerardes.
“It’s certainly a situation when you get pubic dollars involved, you want people to feel like you are sensitive to the public to try to make it a proposal residents can support,” he said.
Public backlash against taxpayers funding costly stadiums for billionaire team owners has grown in recent years.
A move to end tax-exempt bonds for stadiums was initially proposed in the Tax Cuts and Jobs Act. The final version of the bill, which became law in December, preserved their federal tax exemption.
According to a Reason Foundation blog post Dec. 19, the National Football League lobbied to kill the tax exemption ban.
Although no formal decision has been made about whether tax-exempt financing or taxable bonds will be used to finance the Tampa Bay Rays’ new stadium, estimates from past local studies of facilities pegged the cost as high as $800 million.
“That’s a bit high for an MLB stadium in my experience,” Gerardes said. The cost depends on features included in the facility such as a retractable roof, he added. The Rays have said in the past that they wanted a retractable-roof stadium because of Florida’s hot, rainy summers.
Gerardes said the potential cost of a new stadium in Tampa is comparable to the Miami Marlins facility, which opened in 2012. Its bonds were backed by various revenue streams, such as a tourist development tax on local hotel rooms.
Marlins Park, a 37,000-seat, retractable-roof stadium built on public land, cost more than $645 million and became a lightning rod in south Florida politics because it was mostly financed with public funds. The stadium followed by proposed local tax increases prompted recall petitions in 2011 that led to the ouster of County Mayor Carlos Alvarez and Commissioner Natacha Seijas.
The Marlins contributed $154 million toward their stadium, plus $6 million in other funding toward the project, and guaranteed to cover cost overruns.
In recent discussions, Sternberg, the Rays’ owner, has suggested his team might contribute around $150 million to a new stadium. Sternberg declined to say how much the team would kick into the project during a Feb. 9 press conference about relocating to Ybor City.
“We anticipate and expect to be putting up a good amount of money toward this project,” he said. “During the coming months and years we will work on what that looks like.”
Tampa Mayor Bob Buckhorn, who has been involved in private negotiations, said building the stadium will require a complex financial transaction that includes “significant” ownership participation.
Buckhorn said he and Hillsborough County Commissioner Ken Hagan, also a stadium negotiator, have said for “many years we will not put the burden on taxpayers.”
There are other methods to finance the stadium, Buckhorn said, including a community development district, TIF, a CRA, or other development districts where the revenues would help pay the debt. Those methods are considered to be forms of public financing in Florida.
“This will be far more complex than Raymond James, which was of course entirely paid for by taxpayers,” he said, referring to the Tampa Bay Buccaneers’ National Football League stadium.
The Bucs’ $169 million, 65,890-seat stadium opened in 1996 and was financed with a 0.5% local sales tax known as the Community Investment Tax. The Tampa Bay Rays’ stadium financing will “not look anything” like the Bucs’ finance plan, Buckhorn said.
“We’re going to have to be creative,” he said. “We’re going to have to sharpen our pencil on both sides of the equation.”
Gerardes has seen multiple financing tools used to build stadiums around the country. “There’s certainly precedent for using other sources of financing in addition to revenues that may be generated by the stadium itself,” he said.
The Rays present domed home, the bond-financed Tropicana Field, was built in 1990 in the hope of luring a Major League Baseball team. It cost $138 million.
No team came at first, though the dome was used for three years as a temporary ice hockey venue while a permanent arena was built for the NHL's Tampa Bay Lightning on the Tampa waterfront, a mile and a half from the proposed new Rays' stadium.
After St. Petersburg landed an MLB expansion franchise, another $85 million was spent to convert the dome back to a baseball venue that opened for the then Tampa Bay Devil Rays in 1998.
The St. Petersburg City Council said last year that taxpayers had invested $400 million in the dome over the years.
“Currently, we have one debt issue remaining with payments through Oct. 1, 2025,” St. Petersburg Chief Financial Officer Anne Fritz said in an email. “The total outstanding is $14,845,000.”
The Rays consistently rank near the bottom of Major League Baseball home attendance, finishing dead last for the previous three seasons. Forbes placed the value of the Rays at $825 million in April 2017, a rank that is 30th among MLB team valuations.
The Rays and MLB say the 28-year-old stadium must be replaced and that the team must play in a more accessible place for fans to attend.
In January 2016, the St. Petersburg City Council voted for a memorandum of understanding giving the team until Dec. 31, 2018 to evaluate possible sites in Pinellas County, including Tropicana Field, as well as adjacent Tampa and Hillsborough County.
The MOU agreement indemnified the city against “any and all losses, liabilities and fees in connection with the bonds,” as well as any fees and liabilities connected with the revenues securing the outstanding bonds or any adverse action involving the tax-exempt status of the debt if the team terminates its agreement to play at Tropicana Field before the end of the current lease in 2027.
Two bills pending in Tallahassee and a lawsuit could present hiccups for the Rays and local officials searching for ways to finance the stadium.
House Bill 13, which has passed that chamber and now is under consideration in the Senate, would prohibit a sports franchise from constructing, reconstructing, renovating, or improving a facility on public land leased from the state or a political subdivision.
HB 13 is backed by Speaker Richard Corcoran, R-Land O’Lakes, who sued Tampa last fall contending that the city created a special district to institute an “illegal tax” by charging certain hotels $1.50 per night.
The district plan and assessment charged to hotels was conceived by local hoteliers to pay for a marketing campaign, according to the Tampa Bay Times.
HB 17 could also dent the Rays’ stadium financing plans by revising how CRAs operate. The bill could lead to the dissolution of CRAs, and provides that any new CRA must be created by a special act of the Legislature. HB 17 passed the House 72-32 on Jan. 12 and is waiting to be considered in the Senate.