CHICAGO – Several legal and political obstacles to St. Louis’ commitment to issue debt to help pay for renovations to its professional hockey arena have eased over the last week.
It remains to be seen whether the local progress toward a $78 million financing will be halted by events in Washington, where a final tax bill compromise between House and Senate Republicans is taking shape. It was not immediately clear whether the deal reached Wednesday would ban tax-exempt financing for professional sports stadiums as proposed in the original House version.
City Comptroller Darlene Green also is still considering an appeal of a judge’s order that required her to sign the financing package. Green last week signed the financing under court order. She opposed the deal over concerns of the fiscal impact on the city’s already strained balance sheet and the team went to court to force her hand on the pact approved by the council.
“While I hope that a downgrade of the city’s credit rating does not occur, an August 2017 credit report by S&P specifically warned the financing of Scottrade Center renovations would increase our already high debt burden,” Green said in a statement. “This is a significant burden on our taxpayers, and that is why I called upon city leaders and the Kiel Center Partners to find another financing mechanism.”
Kiel Partners owns the NHL's St. Louis Blues.
Over the past year both Moody’s Investors Service and Fitch Ratings have lowered the city’s credit ratings citing limited financial flexibility, a reserve shortage and high debt levels, she added. Green is still considering an appeal of the court order, according to her spokesman Tyson Pruitt.
The St. Louis Board of Aldermen in February approved a financing agreement that calls for the Land Clearance for Redevelopment Authority of the City of St. Louis to issue $78 million of debt. It would provide $67 million for renovations at Scottrade Center. The other $11 million would fund reserves and cover issuance costs.
The financing plan relies on a series of revenue sources to repay the bonds including a 5% tax on ticket sales and $800,000 in revenue that will be freed in 2021 when bonds are retired for Kiel Opera House renovations. The plan also relies on general city revenue. With interest, the public subsidy totals more than $100 million.
Separately, the financing was blocked by a lawsuit that was settled over the weekend. Alderman Cara Spenser, former state representative Jeanette Oxford, and James Wilson filed the lawsuit in St. Louis County Circuit Court earlier this year arguing the financing ordinance violated the state constitution in how it benefits a for-profit enterprise.
The hockey team leases the arena for $1 per year from the city under a 50-year deal struck in 1992 that allows it to operate the facility and collect any profits from operations. The complaint argued the lease agreement “clearly relieves the city of any duty to maintain, repair, or renovate the Scottrade Center.” Spenser said in a St. Louis Post-Dispatch report she could no longer pursue the case due to the potential threat of personal financial liability.
The team and land clearance authority said in the story the two developments clear the path for the financing although authority executive director Otis Williams said the financing might not be secured until March. Neither could immediately be reached for comment Wednesday.
The team is also expected to seek state subsidies in next year’s legislative session.