Monthly Archives: November 2013

11/24 News Roundup

— Commissioner Lee states that not approving the deal at next Tuesday’s meeting could jeopardize the deal.

“It’s one of those situations where the longer we drag it out all we do is create more noise and more doubt without any rationale,” Lee said. “I just think it’s better to move forward with it. It’s an economic deal. We have some timing issues we have to deal with in terms of getting a deal moving forward, and I think it’s in everybody’s interest to move forward.”

Read more:  The Marietta Daily Journal – Bottom of the ninth for Cobb BOC vote

Meanwhile, Commissioner Birrell, who states she will vote for the stadium MOU, indicated reluctant support for postponing the vote to December 10.

“I am comfortable, and I’m OK with voting on Tuesday, but if all the commissioners are not and would like to see it postponed until the December 10th meeting, and if it’s not detrimental to this proposal, then I would consider that as well, just to give people time to weigh in,” Birrell said. “I’m just not sure what another two weeks is going to accomplish.”

Read more:  The Marietta Daily Journal – Bottom of the ninth for Cobb BOC vote

In my mind, this is a big concession for a group that has been so adamant that the deal will go down on Tuesday. A crack like this, coupled with a poll showing 80% support for more discussion (and a majority opposing the project altogether) among Cobb taxpayers, increases the likelihood of postponement. Commissioner Cupid has not come out in support and has expressed concern over the speed of the deal going down. Commissioner Ott has not made his public position known (though I anticipate he will vote to approve the MOU). Birrell could be the swing vote on postponement, so I won’t be surprised if it happens. If Monday’s  public town hall meeting goes like last Thursday’s, then everything will probably go down on Tuesday, If the opposition shows up in greater numbers, things could get interesting.

— The AJC has an article about traffic around the new stadium. In the discussion is a table of travel time comparisons between Turner and the Cobb stadium site based on yearly averages from 5:30-6pm at different metro-Atlanta locations (location, Turner, Cobb).

 

Gwinnett County (Beaver Ruin) 40 min. 32 min.

N. Fulton County (Holcomb Bridge Road) 66 min. 39 min.

Cobb County (I-75/575 interchange) 32 min. 10 min.

Midtown Atlanta 12 min. 11 mins.

Rockdale County (Conyers) 24 min. 44 min.

Stockbridge/SR 138 18 min. 39 min.

I think it shows why the Brave are so eager to move to Cobb; and, the east and south  sides of the Perimeter are the biggest losers in this move.

— The Marietta Daily Journal likes the deal to the point of ridiculing the opposition.

Unfortunately, the Braves move has run into mounting criticism in Cobb. Those opponents have blinded themselves to the likelihood that the private-public partnership envisioned (in which the Braves pay 55 percent of the stadium cost) will be a generator of economic growth in Cobb equal or surpassing the opening of what is now the Lockheed Plant in World War II, the creation of what’s now Kennesaw State University in the early 1960s, the laying of a sewer trunk line through rural east Cobb in the late 1960s and the construction of I-75 through Cobb in the mid-1970s.

Read more:  The Marietta Daily Journal – Braves deal a good one and deserves support

So, the stadium project is such an obvious economic plus that If you disagree with supporting it you must be “blinded?” Hogwash, and shame on the editor who flippantly rejects critics who have every right to be skeptical that the stadium might be a boondoggle. I think the critics are in a better position to note the overwhelming consensus of economists, backed by numerous studies of past stadium development projects, that sports stadiums, teams, and events have virtually zero increase in economic impact on their communities. As I note, this project almost certainly will boost economic activity in Cobb, because of the unique interjurisdictional attraction of the Braves, that will result in  an influx of dollars that previously would not have been spent in the county.  It is unclear if the amount will be sufficient to offset the County’s obligation, tough I am skeptical. Instead, I believe it would be wiser for supporters to acknowledge that the project may not be an economic “home run,” and certainly not a “grand slam” for the economy, but it is a project that Cobb taxpayers are willing to pay higher taxes for while acknowledging the potential economic benefits as a bonus. In this case, the proposal is more like a sacrifice bunt.

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Stadium relies on existing parking, that’s the plan

It has become fashionable to poke fun at the Braves’ Cobb stadium plan by pointing out they are building fewer dedicated spaces to parking than currently exist at Turner Field while claiming that there is not enough parking at the Ted.  I understand this seems like a contradiction; however, Cobb and the Braves have not hidden the fact that they are building fewer spaces.  They claim that this is because of an asset of the new location: more available parking surrounding the stadium.

From the AJC (11/16/2013)

The Braves will build only perhaps 6,000 parking spaces at the stadium — 2,000 under the stadium, likely preferred parking, and perhaps 4,000 in a parking deck. For the rest, “there are north of 50,000 parking spaces already right around there that are not used at night,” said Tad Leithead, chairman of the Cumberland Community Improvement District, which will help fund the plan.

“What the Braves are trying to do is create an environment where they don’t have to build much parking but can use parking that’s already nearby,” Leithead said.

People could drive from home to a parking space in, for example, the Cobb Galleria Center. Then they could walk or be ferried by “circulator” trams over I-285, across the pedestrian bridge to the complex.

Now, whether this will happen or not is another question, but the fact that the Braves are building fewer spaces is a feature, not a bug, to the Braves.

11/20 Morning News Roundup

— There will be no discussion open to the public before the Cobb County Commission votes on the MOU.

“First of all, the .33 mills is what I need to make the deal happen financially, and I’m not postponing it; I wouldn’t gain anything by it,” Lee said

Read more:  The Marietta Daily Journal – Chairman stiff arms Tea Party suggestions

And from AJC

Lee scoffed at a reporter Tuesday when asked why there wouldn’t be a public hearing before the commission’s vote.

“We’ve made a decision we’re not going to do that,” he answered.

“I don’t know that having a public hearing would add to the objective of getting more input since we’ve got a lot of input to date.”

— The Braves and government entities overseeing the stadium were not getting along. One example is a clash over parking. (AJC)

— Cumberland CID approved the funding the County asked for.

“The district is putting in over the period of time I think it’s right at $150 million — $5 million for 30 years,” Leithead said. “The project is putting $1 billion dollars into our district and the economic impact of all that retail and the rental sales and potential increase in property values — David Connell has a report from an economist saying properties could as much as double in the Cumberland CID area — so we believe that the property value increase, the sales tax increase, the investment by the Braves, the investment by the county, is a true public-private partnership and that’s what we do.”

Read more:  The Marietta Daily Journal – Cumberland CID gives Braves

Cobb releases MOU

Addendum (11/20): The MOU appears to include little new information, which I guess is testament to the fact that much of the information was already out there. I learned quite a bit when the Gwinnett MOU was shared with me.  The biggest piece of information I see is that the Braves revenue streams from “stadium rent” ($3 million) and “additional rent” ($3.1 million from naming rights, parking, and advertising marquee) are guarnateed whether or not the Braves even use the stadium. In the Gwinnett deal, the County got a percentage of revenues from these sources (which turned out to be far less than predicted), so the claimed contributions of the Braves were less than the actual amount contributed. In this case, the numbers are set. The difference with the latter rent is that once the bonds are paid off that revenue stream will cease.  Also, cost overruns are capped to the County and excess revenue seems to be devoted to paying off the dept or goes into the still elusive capital maintenance fund.

FAQ about Cobb Braves Stadium

Here is a post to get things started. I have been asked many of these questions about the stadium, so I made one big post with my answers. I may update these answers to include more information.

 

How much economic benefit do sports stadiums typically confer on communities?

Economists have reached a consensus conclusion that sports stadiums do not produce economic benefits to communities at large.  Studies of the economic impact of stadiums consistently find no significant increase in economic activity associated with sports teams or stadiums.

How can stadiums not boost local economies? Fans are buying tickets, eating at nearby restaurants, and buying merchandise around the stadium. There must be an increase in economic activity, right?

There is no denying that fans spend large sums of money to attend sporting events; however most of these expenditures do not represent a net increase above spending prior to the addition of a new team or stadium. Most people who attend games at a local sports stadium would likely have spent that money at other local businesses (e.g., movies, restaurants, retail stores); therefore, most of the dollars spent at the stadium are new spending.

What about tax revenue?  Won’t the new stadium generate new tax dollars?

Property tax will not be assessed on the stadium; however, the adjacent property that will house mixed-use development will pay property taxes.  Sales taxes will be paid by patrons, and sales in Cobb County that would not be made without the stadium will increase tax revenue.

How might the proposed stadium produce a positive economic impact for Cobb County?

Any spending that occurs within Cobb County that otherwise would not have occurred absent the new Braves stadium is net new spending to the County.  Though the net impact to the Atlanta metro area (which includes Cobb County as well as the Braves current home in the City of Atlanta in Fulton County) likely will be negligible, there will be a net increase to Cobb County.  Fans from outside Cobb will now travel to Cobb to spend money that they otherwise would not have spent in Cobb County.  In addition, money spent by Cobb residents who previously spent money outside of Cobb but now spend it inside Cobb (for example, Cobb residents who would otherwise spend money at Turner Field) represents an increase in economic activity in Cobb.

What is the construction cost of the stadium?

$672 million

What does the County pay?

(Most specifics from MDJ, 11/15/2013)

Up front:

Cobb County: $14 million for infrastructure/transportation improvements around stadium

Cumberland CID: $10 million toward footprint of the stadium.

Total upfront payment: $24 million

Annual:

Hotel tax:  $940,000 from County’s existing 8% hotel tax.  Annually the tax collects approximately $11 million, which goes to Exhibit Hall Authority. The authority keeps 62.5% and returns 37.5% to the County. Bonds used to pay off Cobb Energy Performing Arts Centre, excess must be spent within year on travel and tourism.

Car rental tax: $400,000 generated from new 3% tax on car rentals in the County.

Parks bond extension and reallocation: $8.67 million.  Three voter-approved general obligation bonds for parks (approved in 1996, 2007, and 2008) are scheduled to expire in 2017 and 2018.  The bonds are funded by 0.33 mills property tax.  Instead of expiring, the bonds will be extended for 30 years.   

New Cumberland Special Service District tax: $5.15 million. This is a new tax district that adds 3 mills in property taxes in the area and allows for the taxing of apartments.  Commercial property owners in the existing Cumberland CID pay 5 mills in additional property taxes. The area of the district will be similar to the existing CID.

New Cumberland Special Service District hotel circulator fee: $2.74 million. This revenue is generated from a $3 per night charge for hotels in the district footprint.

Total annual contribution: $17.9 million

Other:

Cobb County: $3.5 million for pedestrian/shuttle bridge over I-285 (not included in $672 million proposal)

What do the Braves pay?

(From MDJ, 11/15/2013)

Up front:

$230-$280 million (minimum contribution of $230 million; unclear why this value has a range)

Annual:

Rent: $3 million

Naming rights: $1.5 million

Parking: $1.5 million

Marquee advertising: $100,000

Total annual contribution: $6.1 million.  This total contribution is guaranteed according to County finance director Jim Pehrson.

How does the Cobb stadium deal compare with other recent stadium deals?

Team

Year

Cost when built

Cost in 2013 $

% Public

   

(in millions)

(in millions)

 
Miami Marlins

2012

$515

$525

70%

Minnesota Twins

2010

$522

$560

75%

New York Yankees

2009

$1,600

$1,746

33%

New York Mets

2009

$632

$690

34%

Washington Nationals

2008

$611

$664

100%

St. Louis Cardinals

2006

$344

$400

12%

San Diego Padres

2004

$449

$557

57%

Philadelphia Phillies

2004

$458

$568

50%

Cincinnati Reds

2003

$320

$407

82%

         
Mean  

$606

$680

57%

Median  

$515

$560

57%

         
Cobb-Braves Stadium    

$672

45%

 

Source: ballparksofbaseball.com, with further investigation from various sources

 

Are hotel taxes paid only by visitors?

No. The party who remits the tax to the government is not necessarily the party who bears the burden of the tax.  The reason for this is that a buyer or sellers can adjust the amount they buy or sell of the taxed commodity.  Let’s assume the case of a $100 hotel room in the Cumberland CID district that is taxed at the 8% rate plus the $3 CID circulator fee.  If the hotel owner raised his/her rate from $100 to $111 to pay for the new tax, buyers may choose to stay at another location just outside the taxed district for less than $111, causing lost revenue to the owner, lost tax revenue to the county, and the hotel patron being less happy by choosing a hotel in a less desirable location.  To combat the response to the tax, the hotel owner may lower his/her price to keep his rooms filled.  If he/she lowered the room rate to $90, the hotel patron would pay $100 (the previously non-taxed room rate) and the hotel owner (a local) would bear the entire burden of the tax by receiving only $90 for a $100 room.  The reality is that both the hotel owners and hotel patrons share the burden of the tax, and the proportion of the burden is determined by how sensitive hotel owners and patrons are to hotel prices.

Are car rental taxes paid only by visitors?

Except in rare cases, car rental taxes will be paid entirely by Cobb residents. Visitors from outside Atlanta will most likely not arrive in Cobb County and then rent a car.  In most cases they will rent a car at the airport in Clayton/Fulton Counties or drive to Cobb in their own car.  Most car rentals in Cobb are by Cobb residents with car trouble.

 

Is the reallocation of the park bond revenue costless to taxpayers?

No. The taxes that paid off the park bonds were set to expire. Absent their extension these funds would no longer be collected, thus lowering the tax burden of Cobb property owners.  Another option would be to extend the bonds to fund other government services that Cobb residents might value more than funding a baseball stadium.  While the extension of the bonds does not increase taxes collected from property owners above what they pay now, it does impose a cost over taxes that would be paid absent the stadium, either in terms of lower future taxes or alternate government services.

The Cumberland area bears a larger share of the tax burden than the rest if Cobb County. Is this good or bad?

As a principle of fairness, it seems desirable that people who benefit a government project bear more of the cost.  The Cumberland area will benefit more from hosting the Braves than other parts of Cobb County from visitors spending their money in and around the new stadium.  However, it is also true that this area will suffer more traffic congestion, vandalism, and crime from this influx of outsiders.

How is this project unique?

It is common for new stadiums to be built in economically depressed areas in the hope of stimulating economic development.  While there may be some new economic development that results from these projects, the impact is normally a fraction of what supporters of such projects predict.  The downside of opening a new business near a stadium is that if it is stadium -related, businesses mainly get traffic only during events (81 games plus a few non-baseball events), and thus it is hard to maintain this business on non-game days.  If the business is not related to the stadium then business may be disrupted during events, resulting in lost revenue on game days.  By locating the Braves in an area heavily devoted to entertainment, retail, and business commerce, the project may be more suitable for surrounding businesses.  Restaurants and shops may serve customers on both game and non-game days.  It is difficult to know what the exact outcome will be, but this approach is somewhat unique.