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December 25, 2009
Stadium Boom Deepens Municipal Woes
The New York Times
by Ken Belson
Two days after the Atlantic Yards Master Closing, and after six years of editorializing in favor of Bruce Ratner's basketball arena (which New York City's Independent Budget Office projects as a money-loser for city taxpayers), The Times publishes a cautionary tale on the folly of taxpayer-funded sports venues. It's a must-read, but a bit late, no?
Years after a wave of construction brought publicly financed stadiums costing billions of dollars to cities across the country, taxpayers are once again being asked to reach into their pockets.
From New Jersey to Ohio to Arizona, the stadiums were sold as a key to redevelopment and as the only way to retain sports franchises. But the deals that were used to persuade taxpayers to finance their construction have in many cases backfired, the result of overly optimistic revenue assumptions and the recession.
Nowhere is the problem more acute than in Cincinnati. In 1996, voters in Hamilton County approved an increase of half of one percent in the sales tax that promised to build and maintain stadiums for the Bengals and the Reds, pay Cincinnati’s public schools and give homeowners an annual property tax rebate. The stadiums were supposed to spur development of the city’s dilapidated riverfront.
But sales tax receipts have fallen so fast in the last year that the county is now scrambling to bridge a $14 million deficit in its sales tax fund. The public schools, which deferred taking their share for years, want their money.
...In many cases, the architects of the deals are long gone by the time the bill comes due.
...Problems persist. In 2004, Todd Portune, the commissioner who unseated Bedinghaus, sued unsuccessfully to change the Bengals’ lease. In 2006, the Cincinnati public schools agreed to defer their payments from the sales tax fund for three years to help cover shortfalls.
Still, the gap between expected and actual sales taxes continues to grow, something the county administration had been warning for years. In August, the administrator predicted not only a $14 million shortfall next year, but also a $94 million gap in 2014, a year after interest payments on the stadium bonds rise 44 percent. By then, the Reds will no longer be paying rent.
...So they have ordered more cuts in basic county administrative services, something that creates a slippery slope, said David Pepper, the commissioner who voted against the proposal.
“It’s like the movie where the blob keeps growing and eating away at other elements of county government,” Pepper said. “We’re beginning to cross a line in the sand by taking money from the general fund to pay for the stadiums. Once you put that money in jeopardy, you put the whole county at risk.”
Posted by eric at December 25, 2009 9:43 AM