CXLIV - The Tempe era set to begin as ASU opens Mullett Arena

[gstommylee]

To be fair about this…. The CFD that will be established (by the city) will have the power to make new assessments to the district if it finds itself under water to the bond repayments. But they only are applicable to those who would live and use TED itself . Not the rest of Tempe.

But… this deal isn’t like taking out $200 million all at once. They’re being taken out in four phases and each phase must be fully monetized before bonds can be taken out for the next.

He doesn't seem to understand no matter what happens to the land there is going be some city responsibility towards any project that uses the land and what he basically wants is coyotes to cover everything including building the roads, putting up power lines, putting in water and sewer lines oh and cleaning up the land. You and I and most of everyone else here know that's not how projects work nor how city government works.

There is also no such thing in any multi building project of this scale where every piece of land is 100% private space. There is still the public space (roads, sidewalks, traffic lights, utility lines (water, sewer, power, communications) that the city is responsible for.

He basically thinks cause there's city responsibility that the tax payers are going to end up paying it with increase taxes city wide.

I can suggest that something else goes there like low income housing project uses the land instead and the developer asks for the same tax break as well cause its low income housing not a arena entertainment district, i could argue that Ernie would be perfectly fine with that cause its not an arena.

All i asked for is where in the agreement does it say that the city has to raise taxes to pay for stuff.

 

[powerstuck]

So the argument is that taxes are going to be wasted anyhow so why not build an arena?

I'd want to see the work using something like this as an example:

Tempe has no income tax that I know of, so their revenues are primarily through,,,property tax, yes? Like most municipalities? and their sales tax rate is 1.8%...

So, if I own, say, a $400,000 house in Tempe, how much will my annual taxes go up? And given the increase in value of my house the last 10 years, will I even notice the increase due to the arena vs due to the increase in my property's value? And will I care since my house is worth so much more now?

(a fair estimate for those property taxes currently would be $1500/yr - so an increase in the rate of 1% would be $1.25/month for me)

Even if they city came out in the 2030s and said "OMG we're screwed by this TED thing, we're gonna raise the sales tax rate" to, say 2.0%, an extra $1 per $500 spent, how much am I affected, exactly?

My take on taxes is that like shown here, the city may increase taxes by what ever % they feel like is needed.

The fact is, in the next 10 years, cities will increase taxes, be it because there was an arena built, be it because salaries went up, be it because they are forced by the feds or state to implement new ''green'' measures...taxes will increase.

So, as far as I am concerned, if I can feel that 1-2% increase in my taxes is due to me being able to enjoy NHL calibre hockey in my town...go for it !

 

[Ernie]

My take on taxes is that like shown here, the city may increase taxes by what ever % they feel like is needed.

The fact is, in the next 10 years, cities will increase taxes, be it because there was an arena built, be it because salaries went up, be it because they are forced by the feds or state to implement new ''green'' measures...taxes will increase.

So, as far as I am concerned, if I can feel that 1-2% increase in my taxes is due to me being able to enjoy NHL calibre hockey in my town...go for it !

I mean if you want to pay to watch NHL hockey, that's great! I do the same.

But why should everyone else be paying for you to watch games?

The ridiculous thing is that the money just goes straight into the pockets of extremely wealthy people.

The publicly funded stadium model is a huge racket. The NHL makes plenty of money every year to fund its own buildings.

 

[CHRDANHUTCH]

He doesn't seem to understand no matter what happens to the land there is going be some city responsibility towards any project that uses the land and what he basically wants is coyotes to cover everything including building the roads, putting up power lines, putting in water and sewer lines oh and cleaning up the land. You and I and most of everyone else here know that's not how projects work nor how city government works.

There is also no such thing in any multi building project of this scale where every piece of land is 100% private space. There is still the public space (roads, sidewalks, traffic lights, utility lines (water, sewer, power, communications) that the city is responsible for.

He basically thinks cause there's city responsibility that the tax payers are going to end up paying it with increase taxes city wide.

I can suggest that something else goes there like low income housing project uses the land instead and the developer asks for the same tax break as well cause its low income housing not a arena entertainment district, i could argue that Ernie would be perfectly fine with that cause its not an arena.

All i asked for is where in the agreement does it say that the city has to raise taxes to pay for stuff.

tommy:

what were the taxes paid on renovating Climate Pledge and who was paying for the Storm to play elsewhere while Key Arena at that time was being converted to Climate Pledge......

 

[TheLegend]

I mean if you want to pay to watch NHL hockey, that's great! I do the same.

But why should everyone else be paying for you to watch games?

The ridiculous thing is that the money just goes straight into the pockets of extremely wealthy people.

The publicly funded stadium model is a huge racket. The NHL makes plenty of money every year to fund its own buildings.

For the umpteenth time.

This is NOT a publicly funded arena.

All the other sports facilities in Arizona are, but this one is not.

 

[MNNumbers]

I mean if you want to pay to watch NHL hockey, that's great! I do the same.

But why should everyone else be paying for you to watch games?

The ridiculous thing is that the money just goes straight into the pockets of extremely wealthy people.

The publicly funded stadium model is a huge racket. The NHL makes plenty of money every year to fund its own buildings.

Ernie,

I'm trying to learn if you know something I don't, so please answer a few questions for me....

Just what public funding are you talking about here. In detail, if that's possible, please?

What makes this agreement between the city of Tempe and the Coyotes different than any other private entity doing a project on that piece of land?

 

[Ernie]

Ernie,

I'm trying to learn if you know something I don't, so please answer a few questions for me....

Just what public funding are you talking about here. In detail, if that's possible, please?

What makes this agreement between the city of Tempe and the Coyotes different than any other private entity doing a project on that piece of land?

How are tax abatements not public funding?

There is no other private entity on that piece of land. Why is that? Because there wasn't a competitive bidding process. Just a murky, financially complicated process that is intended to obfuscate a massive handout.

 

[TheLegend]

How are tax abatements not public funding?

There is no other private entity on that piece of land. Why is that? Because there wasn't a competitive bidding process. Just a murky, financially complicated process that is intended to obfuscate a massive handout.

@MNNumbers

Since he’s ignoring me I’ll throw in my opinion here.

I don’t think he understands how the GPLET works at all and is making this a context issue.

Nor does he realize it’s used all over the state. Literally all of the Tempe Town Lake area was developed using a GPLET. This project is no different other than they made the arena and music hall a 30-year instead of the 8-year for the balance.

Most of Arizona’s growth has come from using this mechanism. There’s currently $40 billion worth of investment coming to AZ just for the manufacture of IC chips alone. You don’t get these kinds of investments without some sort of short term abatement.

And it’s not just big corporations who use it. There are small businesses also benefiting from it.

 

[MNNumbers]

How are tax abatements not public funding?

There is no other private entity on that piece of land. Why is that? Because there wasn't a competitive bidding process. Just a murky, financially complicated process that is intended to obfuscate a massive handout.

As a question, and I don't know the answer, does the BMW plant South Carolina receive tax abatements?

 

[Tawnos]

How are tax abatements not public funding?

There is no other private entity on that piece of land. Why is that? Because there wasn't a competitive bidding process. Just a murky, financially complicated process that is intended to obfuscate a massive handout.

The problem with this stance is that it makes the assumption that a "more competitive, less murky, less financially complicated process" would result in anything other than the city being on the hook for the same things it's on the hook for now, including the same land clearing costs and infrastructure and including the tax abatements.

Even if there were 30 bidders, the winner would still be getting the same thing from Tempe.

 

[Ernie]

Even if there were 30 bidders, the winner would still be getting the same thing from Tempe.

That is quite the assertion that has zero evidence to back it up. Competitive bidding processes exist for a reason.

As a question, and I don't know the answer, does the BMW plant South Carolina receive tax abatements?

um. what?

 

[MNNumbers]

That is quite the assertion that has zero evidence to back it up. Competitive bidding processes exist for a reason.



um. what?

There is a BMW plant in South Carolina. BMW put it there because the state government in South Carolina gave them certain advantages. In fact, BMW was smart enough to listen to more than one state government before deciding where to put the plant. There are some tax advantages there as well, but I am not sure of the details.

The reason for the question is to say: How common is it for cities and states to lure business by offering tax advantages? It seems fairly common. And, it happens in many many more places than just in sports arenas.

 

[Ernie]

There is a BMW plant in South Carolina. BMW put it there because the state government in South Carolina gave them certain advantages. In fact, BMW was smart enough to listen to more than one state government before deciding where to put the plant. There are some tax advantages there as well, but I am not sure of the details.

The reason for the question is to say: How common is it for cities and states to lure business by offering tax advantages? It seems fairly common. And, it happens in many many more places than just in sports arenas.

Cool story.

Just going to leave this here:

https://econreview.berkeley.edu/the-economics-of-sports-stadiums-does-public-financing-of-sports-stadiums-create-local-economic-growth-or-just-help-billionaires-improve-their-profit-margin/

 

[MNNumbers]

Cool story.

Just going to leave this here:

https://econreview.berkeley.edu/the-economics-of-sports-stadiums-does-public-financing-of-sports-stadiums-create-local-economic-growth-or-just-help-billionaires-improve-their-profit-margin/

I don't think any of us would take exception to the article. What we are trying to understand better is how close of equivalence can actually be made between tax abatements on the arena and development on the one hand, and paying outright for the arena to be built on the other.

 

[Tawnos]

That is quite the assertion that has zero evidence to back it up. Competitive bidding processes exist for a reason.



um. what?

You’re right, they do exist for a reason. Your essential assertion here, which is that a different bidder would’ve gotten lesser tax abatements and infrastructure support from the city, has even less evidence than my hyperbole though. All of the evidence goes the other way. As has been pointed out several times, this is the way the city of Tempe has been operating for quite a while now.

Any other bidder would’ve gotten similar incentives. This isn’t really anything beyond SOP we’re discussing.

 

[TheLegend]

I don't think any of us would take exception to the article. What we are trying to understand better is how close of equivalence can actually be made between tax abatements on the arena and development on the one hand, and paying outright for the arena to be built on the other.

That article relies on the business model where public funds are used to build the arena itself. Westgate/Glendale would be an example of that.

TED isn’t put together that way and I can pretty much tell Ernie hasn’t bothered to read any part of the proposal at all. Because he’s sticking to the same old general talking points evading requests to point out exactly where the proposal fits into that narrative.

 

[TheLegend]

You’re right, they do exist for a reason. Your essential assertion here, which is that a different bidder would’ve gotten lesser tax abatements and infrastructure support from the city, has even less evidence than my hyperbole though. All of the evidence goes the other way. As has been pointed out several times, this is the way the city of Tempe has been operating for quite a while now.

Any other bidder would’ve gotten similar incentives. This isn’t really anything beyond SOP we’re discussing.

His understanding of the whole process and how it works is skewed.

Tempe didn’t issue an RFP because they suddenly decided they wanted a hockey arena and entertainment district. Meruelo approached the city with a proposal to build an arena/entertainment district and they spent almost two years in informal discussion before getting to the point where they could begin an official discussion.

But because the land is a city owned asset, by law, they must open it up to competing bids with the specifications they previously negotiated.

Cities issue RFPs for a variety of things and at the time the RFP for TED was issued there were dozens of others open at the same time with specific terms and a few of them only had a single bidder.

So the idea that this was some sort of shady dealing by the city and/or Alex Meruelo is complete nonsense.

 

[Dirty Old Man]

TED isn’t put together that way and I can pretty much tell Ernie hasn’t bothered to read any part of the proposal at all. Because he’s sticking to the same old general talking points evading requests to point out exactly where the proposal fits into that narrative.

Yup, he's pretty much "going down with the ship" as it were. Putting links to irrelevant articles of dubious quality to "support" his "position".

 

[gstommylee]

tommy:

what were the taxes paid on renovating Climate Pledge and who was paying for the Storm to play elsewhere while Key Arena at that time was being converted to Climate Pledge......

Non. OVG/Seattle Kraken paid for it. They did for a couple years got tax deferred which was approved by the state of washington until things got done and open for operations Those deferred taxes are still going to get paid. City of Seattle didn't pay a penny for it.

What coyotes are doing is completely different than what we did for ours. They are taking a big piece city property that's a land fill and redeveloping. We just took an existing building kept the roof and redid everything else. In coyotes case there is still city responsibility for infrastructure, utilities and cleaning up the land. You can't take Tempe's responsibility out of the equation.

 

[awfulwaffle]

There is a BMW plant in South Carolina. BMW put it there because the state government in South Carolina gave them certain advantages. In fact, BMW was smart enough to listen to more than one state government before deciding where to put the plant. There are some tax advantages there as well, but I am not sure of the details.

The reason for the question is to say: How common is it for cities and states to lure business by offering tax advantages? It seems fairly common. And, it happens in many many more places than just in sports arenas.

I think it was about $200 million.

 

[mouser]

How are tax abatements not public funding?

There is no other private entity on that piece of land. Why is that? Because there wasn't a competitive bidding process. Just a murky, financially complicated process that is intended to obfuscate a massive handout.

A) Because the City of Tempe owns the land.

B) Because the land, a garbage dump landfill, currently has negative value of $50M-$80M.


The City of Tempe couldn't give the land away for free even if they wanted to. The risk to any private party buying the negative valued land from Tempe is too high--the purchaser would assume all the garbage dump cleanup legal cost obligations exceeding the land value. The only real solution for Tempe to get rid of the negative value land is to find some partner to take ownership of the land with financial concessions from Tempe. The Coyotes proposal is carefully crafted to include those financial concessions with minimal to no risk from the city of Tempe by using a CFD (Community Funding District) mechanism.


And for those that might want to argue "just turn the land into a park or green belt"--there's no guarantee Tempe won't be found liable in the future to clean up that garbage dump even if they build a park over the landfill. It's in Tempe best interests to get the land remediated and off their city books with private development partner(s). The high negative value of the land means a bigger/higher density development is necessary to make the land purchase profitable for private developers.

 

[Fenway]

I worked on the Boston feed from Tempe last Friday - it didn't go well.

The problem is to correct the issues you would need to eliminate another 150/200 seats.

I look at NHL Phoenix and MLB Tampa Bay and say after 25 years move on.

 

[Salsero1]

I worked on the Boston feed from Tempe last Friday - it didn't go well.

The problem is to correct the issues you would need to eliminate another 150/200 seats.

I look at NHL Phoenix and MLB Tampa Bay and say after 25 years move on.

Fortunately, Alex Meruelo (the only opinion that matters) doesn't agree.

 

[aqib]

A) Because the City of Tempe owns the land.

B) Because the land, a garbage dump landfill, currently has negative value of $50M-$80M.


The City of Tempe couldn't give the land away for free even if they wanted to. The risk to any private party buying the negative valued land from Tempe is too high--the purchaser would assume all the garbage dump cleanup legal cost obligations exceeding the land value. The only real solution for Tempe to get rid of the negative value land is to find some partner to take ownership of the land with financial concessions from Tempe. The Coyotes proposal is carefully crafted to include those financial concessions with minimal to no risk from the city of Tempe by using a CFD (Community Funding District) mechanism.

You don't know that since the RFP was written so that only the Coyotes could respond unless an MLS team decided to come out of nowhere.

 

[Ernie]

You’re right, they do exist for a reason. Your essential assertion here, which is that a different bidder would’ve gotten lesser tax abatements and infrastructure support from the city, has even less evidence than my hyperbole though. All of the evidence goes the other way. As has been pointed out several times, this is the way the city of Tempe has been operating for quite a while now.

Any other bidder would’ve gotten similar incentives. This isn’t really anything beyond SOP we’re discussing.

Are the amount of incentives reasonable? Are those incentives handed out for other projects willy nilly, or are they given for things like low income housing?

The simple fact is that the economics of the NHL force small market teams to have "partnerships" with local government. It isn't a viable business model to build an arena with an NHL team in it unless it's a large market. But the public opinion has turned against the idea and now these deals have to be contorted in ways that give illusory public benefits.

A) Because the City of Tempe owns the land.

B) Because the land, a garbage dump landfill, currently has negative value of $50M-$80M.


The City of Tempe couldn't give the land away for free even if they wanted to. The risk to any private party buying the negative valued land from Tempe is too high--the purchaser would assume all the garbage dump cleanup legal cost obligations exceeding the land value. The only real solution for Tempe to get rid of the negative value land is to find some partner to take ownership of the land with financial concessions from Tempe. The Coyotes proposal is carefully crafted to include those financial concessions with minimal to no risk from the city of Tempe by using a CFD (Community Funding District) mechanism.


And for those that might want to argue "just turn the land into a park or green belt"--there's no guarantee Tempe won't be found liable in the future to clean up that garbage dump even if they build a park over the landfill. It's in Tempe best interests to get the land remediated and off their city books with private development partner(s). The high negative value of the land means a bigger/higher density development is necessary to make the land purchase profitable for private developers.

This line of reasoning is silly. Meruelo is not uniquely suited to cleaning up a garbage dump. In fact, his lack of experience puts this whole proposition on even more shaky ground.