Cobb Braves Stadium faces increasing scrutiny
When the numbers for the proposed Cobb County-Atlanta Braves stadium are released today, they will show the Braves are paying for 55 percent of the $672 million stadium cost, county chairman Tim Lee told the MDJ late Wednesday night.
“The other 45 percent will be funded without a tax increase for over 95 percent of Cobb County residents,” Lee said. “This is a public-private partnership and the Braves are paying for 55 percent of the cost.”
Commissioner Helen Goreham, who has been reviewing the proposal, said she is a fan.
“I’m very comfortable with it,” Goreham said. “The taxpayers are going to be pleased with the arrangement that is going to be shared with the media very shortly.”
“I believe that those who are going to benefit the most from the Braves moving to Cobb County will be the ones that will be making the largest investment in it,” Goreham said.
Who are those people?
Lee said they were “those who live in area of the Cumberland Community Improvement District” where the new stadium’s home is expected to be built.
“It’s a win-win deal for Cobb County and the Braves because it provides a fiscally sound, balanced funding model that takes advantage of the great opportunities provided by the Braves for economic development, job creation, at a good investment for Cobb Countians,” Lee said.
The Board of Commissioners is scheduled to vote on a memorandum of understanding with the Braves at its Nov. 26 meeting. Goreham, who first learned the Braves were eyeing a move to Cobb County only a week ago, said she wished there was more time before the vote, but that’s the nature of the project.
“I think that was dictated by the nature of this economic development project, OK?” Goreham said. “And we’ve seen this in other economic development projects where we’re trying to court a business, or in this case a sports team to the area, and not being on the ground floor of this from the beginning, I think that the speed and the confidentiality is necessary because of the competitive nature usually with businesses, but in this sense there’s a lot of politics involved.”
Goreham said she had a message for those Cobb Countians anxious to see the details of the transaction.
“My message to them is that this is going to be a positive for the county for many years to come and they should be pleased with the figures,” Goreham said.
If the Cobb County portion is 45 percent, the cost will be about $302 million; if it’s 55 percent, the cost will be about $370 million. And the County Commission is set to vote on a Memorandum of Understanding in twelve days. I think it took more than twelve days to close on our house when we bought it, I’d sure imagine that more than twelve days are necessary for a project of this scale, especially if the public will be allowed some input.
And note, we still don’t know the exact mechanism for Cobb County’s participation, and it’s not clear how the financing will be structured.
Luckily for us, Greg Bluestein ran some numbers in his article in the AJC questioning where the money will come from.
A $350 million investment under the same terms (4.5% interest on 30-year bonds), for example, would cost taxpayers about $21 million a year.
Selling bonds to raise construction funds is a common method of financing public projects. Investors are repaid with interest over a set period, usually 20 or 30 years for major projects.
The Cobb-Marietta Coliseum Authority will own the facility and issue the debt, meaning it will also have to raise the funds to make the payments. One authority board member told The Atlanta Journal-Constitution Tuesday that it will likely issue revenue bonds, that will rely on specific sources to raise the money.
Those sources could include hotel-motel taxes, Cobb ticket surcharges, money from Cumberland Community Improvement District fees or sources from the facility itself, such as rent payment from the Braves.
“It seems to me there will have to be a good deal of creativity in order to generate the amounts they’ll need,” said Joey Smith, an economist with the University of West Georgia.
Terry Chastain, an attorney with Balch & Bingham who represented the Perimeter Community Improvement District, said he also expects funding to come from a variety of sources, including a hefty chunk from the Cumberland CID, which levies a tax on businesses within its borders.
“I think you can stitch it together in different ways,” he said, noting the CID could fuel infrastructure improvements while hotel-motel taxes could also fund a portion of the deal. “They can cobble the money together … but I haven’t seen concrete financial plans, so it’s tough to know.”
Many in the business community expect the Cumberland CID will be a key player. Cumberland sent out an email this week touting the Braves’ potential relocation. Braves officials are expected to appear at the Council for Quality Growth breakfast meeting next week, an event headlined “Why Move Your Business to a CID.”
The thing about the Cobb County Braves Stadium I can’t get my mind around is the rapidity with which the public financing portion must be finalized and voted on by the Cobb County Commission. I wrote a little bit about it on InsiderAdvantage.com yesterday and I’ve made the article open for anyone to read.
Cobb Commission Chair Tim Lee says that the financing details will be released before the end of the week, but if details are released Friday, that leaves only eleven days before the November 26th vote by the County Commission. Less than two weeks for elected officials to hear from their constituents and digest the details of a deal that could potentially near half-a-billion dollars, and obligate some group of Cobb County taxpayers for 20 years seems like short shrift being given to such an important decision.
Benjamin Flowers from the Georgia Tech School of Architecture was on public radio’s Marketplace the other day discussing the proposal and how it fits into modern baseball’s paradigm.
[Flowers] says stadiums are becoming increasingly disposable, because upgrades to more luxury seating and seat licensing fees have become big money makers. “The team owners and franchises have realized that the real value in a stadium is not in a sporting event or even hosting more fans, but rather as a way of making money,” Flowers says. “Stadiums are now really understood in the same way skyscrapers used to be which is as machines for generating revenue.”
Flowers says that teams push for new stadiums because they keep getting cities to give fork over the funds to build them. “The argument I always say is, if you’re walking down the street and there’s a pile of money there, you don’t say well, I don’t need this pile of money, someone else might make better use of it,” he says. “You pick it up.”
Here’s something else Flowers said that I haven’t seen or heard anywhere else.
In this particular case with the Braves, I think what you’re seeing, is that there’s a fairly well-connected real estate investment group active in Cobb County that really wants to see an anchor tenant for a much larger real estate redevelopment project at this site. And so the Braves stadium operates much in the same way as say, Macy’s would in a mall as the kind of big anchor tenant that brings in people who then also go shopping and spending their money and spending their time elsewhere. And so that’s I think that’s what’s really is the driver of this particular project.
It’s unclear to me whether Flowers is speaking of a specific redevelopment group with a specific larger plan, or if he means the general business environment in Cobb County.
Dave Williams of the Atlanta Business Chronicle takes a look at the traffic statistics around the proposed new stadium location and says they make a compelling case for light rail to serve the project.
Interstate 75 in the area of the stadium site already carries more traffic than the Downtown Connector during the afternoon rush, the period leading up to the start of most Braves home games, according to figures compiled by the Georgia Department of Transportation.
For example, the average hourly traffic volume on northbound I-75 between Windy Hill Road and Delk Road in August was 10,236 vehicles during the period covering 2010 through 2013.
Southbound, the same stretch of I-75 carried an average of 8,215 vehicles per hour during the afternoon peak.When the stadium project was announced this week, Cobb County Commission Chairman Tim Lee said a series of planned transportation improvements in the Cumberland-Galleria area would be enough to accommodate the additional traffic I-75 would pick up from the Connector for Braves games.
But what is really needed is a passenger rail line, said Gordon Kenna, CEO of Georgians for Passenger Rail.
“There’s already a pretty strong case for rail,” Kenna said, referring to the stretch of I-75 in southern Cobb County that he called the most congested highway in the Southeast. “This just reinforces that.”
A plan to build a rail line connecting the Cumberland-Galleria area with Midtown Atlanta was among the projects on the regional transportation sales tax referendum that failed last year.
In the Marietta Daily Journal today, Cobb Chairman Tim Lee takes issue with Atlanta Mayor Kasim Reed’s statement that a new stadium in Cobb will require light rail service.
Reed said in a press conference this week that “Because of the transportation issues, if Cobb goes forward with this, they’re going to have to have rail, which would be the first introduction of light rail.”
The MDJ asked Lee whether Reed’s statement was accurate.
“No, absolutely not,” Lee said. “We’re not going to use that, we’re going to use bus rapid transit, if we do, it will be BRT.”
State Rep. Earl Ehrhart, who played matchmaker by introducing some of the principals in the deal, also says rail to the stadium is not necessary. Again, from the MDJ:
“But the idea that we have to have some kind of light rail public transit system is, hey, even the current stadium doesn’t have it, and he’s had, what, 20 years to get one to it?” Ehrhart said.
Ehrhart said he doesn’t oppose a transit option in Cobb’s future.
“But if we do, let’s have it the conservative, Republican, Cobb County way and make it fare dependent. In other words, if you get on, whether it’s a BRT or some type of people train or whatever you actually pay what it’s worth, it’s not some $2 dollar government subsidized concept,” Ehrhart said.
If the cost of the trip is $10 or $15, that’s what people who ride it pay.
“That way employees can utilize it, people who want to see traffic come down can utilize it, all kinds of good reasons, but let’s don’t accept this 20-year-old far-left ‘public transit is the only way to move people’ paradigm,” he said. “Let’s do it differently. Let’s do it right. I’d love to connect the three Braves’ stadiums, some way, wouldn’t that be cool? Maybe Rome to Cobb to Gwinnett.”
Ehrhart said despite Atlanta officials’ desire to see a MARTA rail line extend into Cobb, it’s not going to happen. He explained why Atlanta has pushed for it for so long.
“I guess if you’re a part of a failed public-transit experiment it’s kind of nice to have company,” Ehrhart said. “I don’t think the Cobb County taxpayers want to be any part of that and I think they made that clear in the TSPLOST vote.”
Balfour: Scattered, Covered and Smothered
Scattered - Yesterday, the panel that met to decide whether to recommend Senator Don Balfour be suspended from office after his indictment recommended his suspension. Governor Deal quickly made it so.
Smothered – The Senate Committee on Assignments stripped Balfour of all his committee assignments, writing in an email:
The Senate Committee on Assignments met today and has made the following changes to Senate committee assignments:
Senator Don Balfour has been removed as Chairman of the Reapportionment and Redistricting Committee, as Vice-Chairman of the Health and Human Services Committee, and as an Ex-Officio member of the Banking and Financial Institutions Committee.
Senate Rule 2-2.1 allows the Committee on Assignments to remove Senators from committee officer positions and Senate Rule 2-3.2 (b) empowers the Committee on Assignments to remove ex-officio committee members. Senate Rule 2-3.3 prevents the Committee on Assignments from removing Senators from standing committees during a term.
Additionally, the President of the Senate has removed Senator Balfour from the Senate State Fair Tax Study Committee pursuant to Senate Resolution 72.
Covered – The Republican Caucus leadership also suspended Balfour’s membership in the Caucus, meaning he will have no vote on leadership elections or internal organizational matters, nor will he be able to attend caucus meetings. Under the terms of the letter released by the Caucus, his suspension can end if (a) he vacates his office, which terminates his membership in the Senate Republican Caucus or (b) he is reinstated by a 2/3 vote of the members of the Caucus. The most interesting thing about the letter is that it is addressed to “Mr. Balfour,” forgoing the title of “Senator.”
ICE, ICE baby
If I were Jeff Sprecher, that would be my walk-on music. Sprecher is the Chairman and CEO of Intercontinental Exchange, trading under the ticker symbol ICE, which closed its $11 billion purchase of the New York Stock Exchange yesterday. To Georgia politicos, he may be better known as Mr. Kelly Loeffler, but if he wasn’t already a business titan, he is now. The AJC article on the closing has some interesting perspective on Sprecher’s management style.
Sprecher said ICE embraces technology but is not forcing users away from trading floors. When it bought and added technology to what was then the New York Board of Trade, trading naturally moved to screens within seven months, he said.
“The velocity of trading, the amount of trading, has increased and the transaction time has decreased,” he said. “And so the market itself voted, not ICE. We ran floor and screens in parallel, and overwhelmingly, people moved to the screen.”
Sprecher has said he wants to lead reform at the stock exchange. He considers trading overly complicated, and the process opaque. As a result, he has said, individual traders are at a disadvantage compared to companies or hedge funds that are constantly in the market.
“We need to just simplify, make it easy to understand what you’re buying when you buy a stock, and how it’s being handled, and that what you’re being advertised is what you’re getting,” he said. “The reason we call Wall Street Wall Street is because of the location of the New York Stock Exchange … . I think it’s a metaphor, but I also think it’s a very good place to start that dialogue.
He said Wall Street is “the birthplace of capitalism that’s envied around the world. It should be the place that we continue to improve in our capital markets.”
While the New York Stock Exchange deal has made financial headlines, ICE is most interested in a European exchange it acquired as part of the deal, called Liffe.
The futures exchange Liffe, the largest financial product exchange in London, hosts the FTSE, London’s equivalent of the S&P 500. It also is the place where traders buy and sell bets on interest rates.
The estimate of the London Interbank Offered Rate, or Libor, is traded on that exchange. It is the risk-free interest rate banks use to make loans to one another and used as a point of reference for everything from mortgages to the U.S. dollar. ICE now owns Libor, too.
I would argue that ownership of Libor is at least as important as the NYSE, as it underlies a significant portion of the world’s banking system. The other thing I’d do if I were Sprecher is to make sure I have a Ferrari to play “Ice, Ice Baby” in. I suggest the 458 Italia.
Savannah Harbor Expansion to receive funding boost
Yesterday, Governor Deal announced that he would seek an additional $35 million dollars in the next state budget to completely fund the state’s portion of the Savannah Harbor expansion. Walter Jones of Morris News writes:
That will bring the state’s commitment from past years to $266 million for 40 percent of the cost of the massive project. The federal government is expected to come up with the remaining 60 percent.
“We will all be exerting pressure to get the federal government to begin to fund their portion of the cost of the project,” he said.
The federal government still must ante up, although both President Barack Obama and Vice President Joe Biden have been to Savannah and endorsed the project.
“I would hate to think the federal government would let little old Georgia embarrass them (for falling short),” the governor joked.
His announcement came during the annual State of the Ports luncheon sponsored by the Georgia Chamber of Commerce.
The governor said he doesn’t want the U.S. Army Corps of Engineers to wait for Congress to pass a budget with the funds.
“We know that they are slow sometimes,” said Deal, who spent 18 years in Congress. “The next thing we are asking permission to do is for the Corps of Engineers to begin to spend the state’s money so we can start the project, and then we will let the federal government catch up.”