ducks
08-30-2007, 09:00 AM
Spurs seek "venue tax" funds for arena upgrades
Arguing that upgrades to the AT&T Center are necessary to remain competitive in today's NBA, the San Antonio Spurs want Bexar County taxpayers to reauthorize the "venue tax" that built the arena.
County Judge Nelson Wolff agrees that the four-time champions should get part of the renewed revenue stream — pending voter approval — along with the San Antonio River Improvement Project, amateur sports fields and a new performing arts center.
The venue tax on hotel rooms and car rentals is set to expire when the AT&T Center is paid off, sometime between 2009 and 2012.
The Spurs have a $164 million wish list of projects for the arena — built five years ago for $193.5 million — but team management is working with the Commissioners Court to whittle that amount to between $75 million and $100 million.
The team is responsible for maintenance and upkeep of the arena, according to its contracts with the county. Some people familiar with those contracts say the Spurs should foot the bill for much of what they want the county — and, by extension, taxpayers — to fund.
Team management argues that it is not responsible for upgrades, just maintenance, and that without new sources of revenue, it cannot pay the player salaries that would allow the team to keep winning.
Wolff and other commissioners appear to have found that argument persuasive, saying the county must protect its investment in the building. And their decision reignites the national debate about how far public entities should go to support private businesses — even those that win major sports championships.
Critics say the contracts already protect the county's investment and what the team wants is simply more bells and whistles.
Economists such as Robert A. Baade of Lake Forest College in Lake Forest, Ill., who has studied public arena funding for 20 years, say spending public dollars to enrich a private business rarely benefits those who pay the tab.
As teams increase revenue by upgrading their arenas, "that ratchets up what other teams must do," Baade said. "Where does it end?"
"It's been discussed all over the country a thousand times," said David Marquez, the county's economic development director, who oversaw the building of the arena and agrees the county ought to fund the upgrades. "We're not going to solve that problem here."
A quality standard
Terms of the Spurs' 25-year lease demand that, in exchange for the revenue the arena generates (minus the 20-odd days of the San Antonio Stock Show & Rodeo), the Spurs must keep the building to a "quality arena standard."
Toward that end, the contract allows the team to tack a $1 surcharge on tickets and parking. Each quarter, $250,000 of surcharge funds must be deposited into a "renewal and replacement" account. The rodeo also contributes $300,000 annually. The fund has a current balance of $2.1 million.
The team is "doing an outstanding job of maintaining the facility," says Derek Howard, executive director of the Community Arenas Board, which oversees the 175-acre property that includes the Freeman Coliseum and the AT&T Center. "And our position is it behooves them to keep that building in tip-top condition."
Howard said CAB members "pressed really hard" to make sure the Spurs would be responsible for keeping the building up to a "quality arena standard" during negotiations in 2000, after the venue tax won voter approval.
The thought, he said, "was 'How do we keep up with the demands of the NBA without having to go back to the community?'"
The surcharge was their answer.
Jim Lunz, who with the late Joe Bradbury represented CAB during negotiations, believes language in the contract encompasses almost everything the team is asking for. The renewal and replacement account should cover most of it, he said, while the team ought to pay for upgrades, such as new restaurants.
"For them to come back to the taxpayer because they've won some championships is ludicrous," he said.
Spurs management says the issue of upgrades was never on the table during negotiations.
"We ran out of time," said Leo Gomez, the Spurs vice president of external affairs and corporate development. "It's something we knew we'd have to address, and now here we are."
CAB member Dan Puckett, who also was on the board at the time of the negotiations, said the contract language is open to interpretation, but he favors giving the team what it wants.
"The Spurs are the best thing to happen to San Antonio," he said. "I think it would be money well-spent."
But the differences between "renewal and replacement," which comes out of the arena's annual operating budget, and "upgrades" are often murky.
For example, in the Spurs' wish list is a $96 million lump sum for "system upgrades and improvements" that includes a line item for repainting the outside of the building.
"I do that every year," said John Sparks, the arena's general manager, adding that it likely won't be included in any final request.
Some differences seem semantic. Recent upgrades to the arena's scoreboard, which AT&T paid for when the building changed names, "could have ended up under R and R, or it could have ended up under maintenance," Sparks said.
What isn't included in either the maintenance budget or the renewal and replacement account, he said, is "the 'wow' stuff, the great thing that we need to have" that will keep the AT&T Center "on par with the top 10 arenas."
That includes the new dining options; enclosing the Sombrilla, the airy open bar area between the arena and the Coliseum; and reconfiguring the lower seating bowl for better sight lines.
Successful strategy
Commissioner Paul Elizondo, who was tasked by Wolff to negotiate with the team, said he's more interested in spending venue tax money to replace the roof than to expand the arena's restaurants.
"South food court expansion, east balcony restaurant," he read from the wish list. "I have yet to be convinced."
He does believe the county must protect its investment in both the building and the team.
"The Spurs have to have enough money to pay (top players) and win. So far that strategy has been successful. We want to keep it that way," Elizondo said.
The upgrades also would benefit the San Antonio LivestockExposition, which runs the rodeo. Already the arena has allowed for the expansion of an event that this year generated $7.6 million for education, up 75 percent since it began using the arena in 2003. Not surprisingly, rodeo officials are all for the upgrades.
That the venue tax is ostensibly paid for with other people's money is a big reason the Spurs, back in 1999, chose the county's plan to build a new arena over the city's plan, which would have stuck local taxpayers with a quarter-cent sales tax increase.
To emphasize the point, officials this time have redubbed the venue tax the "visitor tax," as a reminder that, for the most part, locals won't pay.
But Lake Forest's Baade said the idea of transferring the cost to others is really fiction.
"Every time you travel, you're paying for an arena somewhere," he said. "It's an elaborate shell game."http://www.mysanantonio.com/sports/stories/MYSA083007.01A.Spurs_Venue_Tax.34406d3.html
Arguing that upgrades to the AT&T Center are necessary to remain competitive in today's NBA, the San Antonio Spurs want Bexar County taxpayers to reauthorize the "venue tax" that built the arena.
County Judge Nelson Wolff agrees that the four-time champions should get part of the renewed revenue stream — pending voter approval — along with the San Antonio River Improvement Project, amateur sports fields and a new performing arts center.
The venue tax on hotel rooms and car rentals is set to expire when the AT&T Center is paid off, sometime between 2009 and 2012.
The Spurs have a $164 million wish list of projects for the arena — built five years ago for $193.5 million — but team management is working with the Commissioners Court to whittle that amount to between $75 million and $100 million.
The team is responsible for maintenance and upkeep of the arena, according to its contracts with the county. Some people familiar with those contracts say the Spurs should foot the bill for much of what they want the county — and, by extension, taxpayers — to fund.
Team management argues that it is not responsible for upgrades, just maintenance, and that without new sources of revenue, it cannot pay the player salaries that would allow the team to keep winning.
Wolff and other commissioners appear to have found that argument persuasive, saying the county must protect its investment in the building. And their decision reignites the national debate about how far public entities should go to support private businesses — even those that win major sports championships.
Critics say the contracts already protect the county's investment and what the team wants is simply more bells and whistles.
Economists such as Robert A. Baade of Lake Forest College in Lake Forest, Ill., who has studied public arena funding for 20 years, say spending public dollars to enrich a private business rarely benefits those who pay the tab.
As teams increase revenue by upgrading their arenas, "that ratchets up what other teams must do," Baade said. "Where does it end?"
"It's been discussed all over the country a thousand times," said David Marquez, the county's economic development director, who oversaw the building of the arena and agrees the county ought to fund the upgrades. "We're not going to solve that problem here."
A quality standard
Terms of the Spurs' 25-year lease demand that, in exchange for the revenue the arena generates (minus the 20-odd days of the San Antonio Stock Show & Rodeo), the Spurs must keep the building to a "quality arena standard."
Toward that end, the contract allows the team to tack a $1 surcharge on tickets and parking. Each quarter, $250,000 of surcharge funds must be deposited into a "renewal and replacement" account. The rodeo also contributes $300,000 annually. The fund has a current balance of $2.1 million.
The team is "doing an outstanding job of maintaining the facility," says Derek Howard, executive director of the Community Arenas Board, which oversees the 175-acre property that includes the Freeman Coliseum and the AT&T Center. "And our position is it behooves them to keep that building in tip-top condition."
Howard said CAB members "pressed really hard" to make sure the Spurs would be responsible for keeping the building up to a "quality arena standard" during negotiations in 2000, after the venue tax won voter approval.
The thought, he said, "was 'How do we keep up with the demands of the NBA without having to go back to the community?'"
The surcharge was their answer.
Jim Lunz, who with the late Joe Bradbury represented CAB during negotiations, believes language in the contract encompasses almost everything the team is asking for. The renewal and replacement account should cover most of it, he said, while the team ought to pay for upgrades, such as new restaurants.
"For them to come back to the taxpayer because they've won some championships is ludicrous," he said.
Spurs management says the issue of upgrades was never on the table during negotiations.
"We ran out of time," said Leo Gomez, the Spurs vice president of external affairs and corporate development. "It's something we knew we'd have to address, and now here we are."
CAB member Dan Puckett, who also was on the board at the time of the negotiations, said the contract language is open to interpretation, but he favors giving the team what it wants.
"The Spurs are the best thing to happen to San Antonio," he said. "I think it would be money well-spent."
But the differences between "renewal and replacement," which comes out of the arena's annual operating budget, and "upgrades" are often murky.
For example, in the Spurs' wish list is a $96 million lump sum for "system upgrades and improvements" that includes a line item for repainting the outside of the building.
"I do that every year," said John Sparks, the arena's general manager, adding that it likely won't be included in any final request.
Some differences seem semantic. Recent upgrades to the arena's scoreboard, which AT&T paid for when the building changed names, "could have ended up under R and R, or it could have ended up under maintenance," Sparks said.
What isn't included in either the maintenance budget or the renewal and replacement account, he said, is "the 'wow' stuff, the great thing that we need to have" that will keep the AT&T Center "on par with the top 10 arenas."
That includes the new dining options; enclosing the Sombrilla, the airy open bar area between the arena and the Coliseum; and reconfiguring the lower seating bowl for better sight lines.
Successful strategy
Commissioner Paul Elizondo, who was tasked by Wolff to negotiate with the team, said he's more interested in spending venue tax money to replace the roof than to expand the arena's restaurants.
"South food court expansion, east balcony restaurant," he read from the wish list. "I have yet to be convinced."
He does believe the county must protect its investment in both the building and the team.
"The Spurs have to have enough money to pay (top players) and win. So far that strategy has been successful. We want to keep it that way," Elizondo said.
The upgrades also would benefit the San Antonio LivestockExposition, which runs the rodeo. Already the arena has allowed for the expansion of an event that this year generated $7.6 million for education, up 75 percent since it began using the arena in 2003. Not surprisingly, rodeo officials are all for the upgrades.
That the venue tax is ostensibly paid for with other people's money is a big reason the Spurs, back in 1999, chose the county's plan to build a new arena over the city's plan, which would have stuck local taxpayers with a quarter-cent sales tax increase.
To emphasize the point, officials this time have redubbed the venue tax the "visitor tax," as a reminder that, for the most part, locals won't pay.
But Lake Forest's Baade said the idea of transferring the cost to others is really fiction.
"Every time you travel, you're paying for an arena somewhere," he said. "It's an elaborate shell game."http://www.mysanantonio.com/sports/stories/MYSA083007.01A.Spurs_Venue_Tax.34406d3.html