This post is a follow up to the post I wrote at the end of May about the ever-expanding money pit we in El Paso fondly call our Downtown Arena Ballpark.
As I explained when I last wrote on this subject, El Paso has spent the last couple of years trying to figure out how to redefine itself. Our rabidly "progressive" city council passed a new landscape ordinance which requires more greenspaces and less parking as a part of a plan to beautify our city. Our newly adopted master plan calls for smart growth and a redeveloped downtown where multi-storied, mixed use buildings comprised of retail on the bottom and apartments on the upper levels will line narrow streets. We are spending $27 million on upgrading our notoriously badly run bus system--Sun Metro. And the crowning jewel of this new, green us is a brand new Triple A ballpark stadium which we are building on the site of our former city hall. We imploded the latter building, which was only about 30 years old, on April 14, and moved our city offices, so that we could build a new arena stadium for a minor league baseball team which is moving to El Paso. Combined costs for moving the city offices, imploding city hall and building the arena ball park were initially estimated at between $85 and $100 million. After two years of meetings and investment in a public relations firm, we even have a new city motto--"El Paso: It's All Good."
As I explained when I last wrote on this subject, El Paso has spent the last couple of years trying to figure out how to redefine itself. Our rabidly "progressive" city council passed a new landscape ordinance which requires more greenspaces and less parking as a part of a plan to beautify our city. Our newly adopted master plan calls for smart growth and a redeveloped downtown where multi-storied, mixed use buildings comprised of retail on the bottom and apartments on the upper levels will line narrow streets. We are spending $27 million on upgrading our notoriously badly run bus system--Sun Metro. And the crowning jewel of this new, green us is a brand new Triple A ballpark stadium which we are building on the site of our former city hall. We imploded the latter building, which was only about 30 years old, on April 14, and moved our city offices, so that we could build a new arena stadium for a minor league baseball team which is moving to El Paso. Combined costs for moving the city offices, imploding city hall and building the arena ball park were initially estimated at between $85 and $100 million. After two years of meetings and investment in a public relations firm, we even have a new city motto--"El Paso: It's All Good."
The problem, of course, is that it's not all good. Our redevelopment comes at the cost of nearly half a billion dollars. According to a news story by KVIA-TV's Matthew Smith, our city will not break even on the stadium expense for 250 years. The initial cost of this project was estimated to be $50 million, but at the end of May the team owners came back to city council requesting an additional $10 million for "upgrades" to the stadium that were not part of the original plan. The official groundbreaking ceremony for the stadium happened at the end of May, although construction had begun a couple of weeks prior but the city was already overbudget before the groundbreaking even took place. The project manager informed city council that if the additional funds were not appropriated El Paso voters would not get the ballpark they were promised.
As it happens, the voters did not get any say on this project in the first place. If they had, I am quite certain that there would be no stadium under construction and city hall would still be standing. City council made the decision to build the stadium without waiting for an election because they said that this was too great an opportunity to pass up. Voters did vote on nearly half a billion dollars in quality of life improvement bonds and a new hotel tax, but these ballot issues were sold to us with the explanation that the stadium was a "done deal". El Pasoans could not be trusted to understand the benefits of the stadium well enough to be allowed a vote on it, so we could vote only on whether we as a city would pay for the costs with higher property taxes or whether visitors would pay for it with higher fees.
What the voters in El Paso DID get to decide was whether they wanted to reward the city council members who brought us this travesty with more power. On June 15th Steve Ortega, the city councilman who had worked diligently to promote the Downtown Ball Park and other leftist agendas in El Paso was soundly defeated by businessman Oscar Leeser. The message from the voters was crystal clear--Leeser, who owns a highly successful auto dealership and campaigned on running the city the way he runs his business, beat Ortega, who campaigned on pressing forward with big government and increased funding for more expansive projects, by 75% to 25%.
One of Leeser's first acts as mayor was to make sure that the owners of the triple A ball team understood that if they want any more changes to the design of the stadium, they have to foot the cost themselves. Of course, in the last city council meeting of the outgoing mayor and city council, the team owners made sure that they got their 10 million dollar overage funded by the outgoing council since they probably anticipated that the gravy train had been derailed with the election.
Now, we have a new city council, a new mayor and a ball park that we are now constructing at a cost of $60.8 million. But as bad as all of this is, at least we can now relax a little, right?
Wrong. Unfortunately, for El Paso, the Downtown Arena Stadium is the gift that keeps on giving. Like all projects of its kind, the stadium is being financed through the sale of bonds. But this week, the city manager informed city council that in order to sell these bonds, the city must raise the interest rates on the bonds 1.5%. Otherwise, the bonds will not sell, construction on the ball park will stop, and the city will find itself embroiled in a lawsuit with the owners of the team who purchased the Triple A ball team because the city had agreed to build the stadium. Raising the interest rate on the bonds will cost El Paso an additional $17 million in this project, or a cost over $566,000 a year. The city has repeatedly assured us that the money to cover this cost cannot come from property taxes--it must come from sales taxes and fees. That is supposed to make everyone feel better, except for one tiny little detail: When the money from other taxes is diverted to pay for the interest on the bonds, the city has less money in the general fund to pay all of its other expenses: police, fire, city workers, street repair, etc. So in order to make up the shortfall--you guessed it--the city will have to raise property taxes. El Paso already has high property taxes, high sales taxes, and high school taxes. But we can look for them to go up--a lot.
In an irony worthy of great English literature, the excuse for raising the interest rates on the bonds is that because Detroit filed bankruptcy nobody will purchase the bonds unless the rate of interest is higher. Detroit filed bankruptcy due to liberal management and decades of progressive policies that drove the city into the ground. As Detroit goes, so go we also unless we put a stop to this madness. What is saddest of all about the Downtown Arena Ballpark is that it was a financially losing proposition from the start. As deputy city accounting manager Bill Studer told Matthew Smith in that KVIA-TV interview last fall, "They [minor league downtown sports arenas] all lose money from a strictly accounting thing."
Wrong. Unfortunately, for El Paso, the Downtown Arena Stadium is the gift that keeps on giving. Like all projects of its kind, the stadium is being financed through the sale of bonds. But this week, the city manager informed city council that in order to sell these bonds, the city must raise the interest rates on the bonds 1.5%. Otherwise, the bonds will not sell, construction on the ball park will stop, and the city will find itself embroiled in a lawsuit with the owners of the team who purchased the Triple A ball team because the city had agreed to build the stadium. Raising the interest rate on the bonds will cost El Paso an additional $17 million in this project, or a cost over $566,000 a year. The city has repeatedly assured us that the money to cover this cost cannot come from property taxes--it must come from sales taxes and fees. That is supposed to make everyone feel better, except for one tiny little detail: When the money from other taxes is diverted to pay for the interest on the bonds, the city has less money in the general fund to pay all of its other expenses: police, fire, city workers, street repair, etc. So in order to make up the shortfall--you guessed it--the city will have to raise property taxes. El Paso already has high property taxes, high sales taxes, and high school taxes. But we can look for them to go up--a lot.
In an irony worthy of great English literature, the excuse for raising the interest rates on the bonds is that because Detroit filed bankruptcy nobody will purchase the bonds unless the rate of interest is higher. Detroit filed bankruptcy due to liberal management and decades of progressive policies that drove the city into the ground. As Detroit goes, so go we also unless we put a stop to this madness. What is saddest of all about the Downtown Arena Ballpark is that it was a financially losing proposition from the start. As deputy city accounting manager Bill Studer told Matthew Smith in that KVIA-TV interview last fall, "They [minor league downtown sports arenas] all lose money from a strictly accounting thing."
But these costs are inconsequential compared to the benefits of a downtown stadium--right? Wrong. Stadiums lose money from a strictly non-accounting thing too. According to a study conducted last year by Colgate University, only 8 of 55 downtown stadiums constructed with at least 25% public funds are currently fostering economic development. A February 2, 2012 article on Bloomberg.com titled, "As Superbowl Shows, Build Stadiums for Love and not Money" candidly addresses this issue. According to Bloomberg, "Public funding for sports stadiums has been found in dozens of studies over several decades, to fall short of the promised benefits and to cost taxpayers more than expected." Bloomberg cites a study by Harvard associate professor of urban planning Judith Grant Long, who found that the cost of public funding for stadiums typically runs 40% higher than initially promised. These stadiums are the gift that keeps giving--taxpayers continue to pay for the stadiums decades after they are no longer in use. Further, stadiums do not bring economic development to most regions; they just move entertainment dollars around the city. Bloomberg cites a study by Jordan Rappaport and Chad Wilkerson of the Federal Reserve bank of Kansas City which says that even when bringing in a professional sports team the number of jobs created "is almost certainly less than 1000 and likely to be much closer to zero." Other studies cited in the same article indicate that bringing in sport teams kills some jobs and reduces wages. The higher taxes needed to fund stadium projects--such as our hotel tax--can have the net effect of dissuading would-be visitors, and the types of jobs the stadium produces are low wage seasonal jobs. Bloomberg's conclusion: "public funding for new sports stadiums should be up to voters to decide. Cities should make sure the public has access to independent evaluations of the costs and benefits of building a stadium--not just the inflated 'economic-impact studies' done at the behest of team owners and publicized in the media."
As of today, we are into the Downtown Arena Ballpark for $27 million dollars more than was originally projected and construction has only just begun. That does not include any cost for maintenance, repairs or any other unexpected items which will undoubtedly continue to balloon this cost. And the ball park is just one financial pitfall we have embraced as a community. In our zeal to renovate our downtown, we are designating tax dollars from downtown to be placed in the revitalization fund and used to further beautify downtown--at the expense of the general fund. As one of our current city reps explained to KVIA this week, this is a reasonable expense for the taxpayers to absorb because "downtown belongs to all of us." I beg to differ--downtown belongs to a few mega-rich developers who have secured concessions from the city to renovate it at everyone else's expense. Stripping money out of the general fund means that all of us who own property in El Paso have to absorb greatly increased taxes so that the property owners downtown can see their values rise. The only thing more absurd than the fact that we are in this situation is that those who originally voted for this mess continue to attempt to justify it to us.
As I said in my original post in May, El Paso deserved better than what we are getting. Your city, wherever it is located, does too. So when the snake oil salesmen come to your town promising downtown redevelopment involving "green" housing, smart growth and sustainable development anchored by an arena stadium or some other massively expensive entertainment venue paid for by public funds, do yourselves a favor. Just say no.
See more about El Paso's Downtown Arena Stadium in this short video presentation:
Alexandra Swann is the author of No Regrets: How Homeschooling Earned me a Master's Degree at Age Sixteen and several other books. Her novel, The Planner, about an out of control, environmentally-driven federal government implementing Agenda 21, is available on Kindle and in paperback. For more information, visit her website at http://www.frontier2000.net.
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