Ballpark figures: Commission chair cites multiple revenue streams to bankroll stadium, reduce risk
by Jon Gillooly
November 24, 2013 12:34 AM | 5811 views | 11 11 comments | 71 71 recommendations | email to a friend | print
The view to northwest from Interstate ­75/­Interstate 285 intersection of the proposed Braves stadium.<br>Special to the MDJ/Atlanta Braves
The view to northwest from Interstate ­75/­Interstate 285 intersection of the proposed Braves stadium.
Special to the MDJ/Atlanta Braves
slideshow
MARIETTA — In developing the financing plan to pay Cobb’s $300 million part of the proposed $672 million stadium for the Atlanta Braves, county Chairman Tim Lee said he selected a wide range of revenue streams to spread out the risk.

“I tried to come up with several different income revenue streams where any one entity wouldn’t have a significant burden, and it was also by spreading out the different revenue streams, if one of them had a little bit of a dip and the other one doesn’t, it can help smooth it out,” Lee said. “It’s like any organization or business or company, the more revenue streams you have, the safer you are rather than if you just had one or two, you know?”



Property taxes for park land would go to stadium debt payments

One source Lee proposes using is the property taxes that go to pay for park purchases.

In 1996, 2007 and 2008, voters approved general obligation bonds for the purchase of parkland. Those bonds will be paid off in 2017 and 2018 using a millage rate of .33 mills.

Once the bonds are paid off, Lee’s plan is to redirect that .33 mills — rather than eliminate it altogether and lower property taxes — to pay for the bonds that finance the stadium.

The .33 mills brings in $8.7 million a year from property taxes, which translates to $26 a year on a $200,000 home.

Every year, the Board of Commissioners votes to set the property tax rate. It’s Lee’s plan to keep that .33 mills on the books for another 30 years to continue collecting property taxes to pay for the stadium bonds starting in 2017 after the parkland bonds are retired.

“It becomes revenue that goes into the general fund to the county, which is available for other purposes,” said attorney Dan McRae, a partner with Seyfarth Shaw of Atlanta, who is serving as outside counsel on the Braves’ deal.

Lee said it is possible if the stadium and proposed $400 million mixed-use development the Braves plan to build next to it generate enough property taxes, the millage could be lowered or eliminated.

The Cobb-Marietta Coliseum & Exhibit Hall Authority plans to issue $368 million in 30-year revenue bonds. Annual debt service based on current market conditions is about $24 million. Of the $24 million annual payment, the Braves would pay $6.1 million and the county would pay $17.9 million, said Jim Pehrson, the county’s finance director.



A new tax district

Another revenue stream involves creating a new tax district projected to roughly follow the boundaries of the Cumberland Community Improvement District, a 5.5-square-mile district where commercial property owners tax themselves an extra 5 mills to spend on infrastructure improvements.

The new district, which Lee wants the Board of Commissioners to create in December, would be called the Cumberland Special Service District.

Lee said he proposed creating it because the CID can only tax commercial property owners up to 5 mills, whereas the new district will be able to tax commercial property owners and apartment complex owners another 3 mills, bringing in $5.2 million a year.

Nightly hotel charge

On top of the 3 mill tax, Lee proposes assessing hotels and motels in that district at a rate of $3 a room per night.

“The concept is that the stadium will create a great benefit to the hotels and motels, and it will also be a burden on the community that will have to be paid for, so these $3 dollars a room nights will be revenue that will go to the county,” McCrae said.

The $3 fee, which Lee will ask the Board of Commissioners to impose in December, would generate $2.7 million annually.

“Everybody affected by it is not only aware of it, but is wildly in favor of it,” McCrae said. “The hoteliers are ecstatic. What I’ve heard is that the cost of this will be absorbed within the first 30 days and after that the increase in occupancy, their ability to raise room charges, it’s a boon.”

McCrae said the state Constitution gives commissioners “a lot of discretion” in how high they want to raise the per night room charge.

“But remember what they’re doing, the purpose of this is to generate revenue to repay the bonds. You’re not going to generate more revenue than you need,” he said.

As for why Lee didn’t simply propose higher nightly hotel fees to avoid using property taxes in the funding of the stadium, Lee said he worried if the room fees were too high, tourists would go elsewhere.

“I don’t want to price them too far out of the market because, remember, it’s just the ones in that district,” he said.

The 8 percent hotel/motel tax

Another source of funding for the stadium comes from Cobb’s existing 8 percent hotel/motel tax, an amount capped at 8 percent by the General Assembly. The proposal would allocate an annual $940,000 from the county’s portion of its 8 percent hotel/motel tax. Lee said that $940,000 represents funds from the tax that are not otherwise obligated to pay for existing debt, such as that incurred by Cobb Energy Performing Arts Centre. The non-obligated part of the tax now goes to pay for things like improvements to the county’s Jennie T. Anderson Theatre.

When that revenue is directed toward the stadium debt, Lee believes the Anderson Theatre will be fine.

“It’s not a part of their operating budget, because we’re not quite sure whether we’re going to have it every year,” Lee said. “It’s stuff we use for capital improvements and things like that, so we’ll just have to plan for capital improvements otherwise,” he said.

Finally, Lee is asking the Board of Commissioners to approve a county-wide 3 percent rental car tax, which is expected to collect $400,000 annually, to help finance the deal.

“There’s a wide variety of people that rents cars,” Lee said.

The Board of Commissioners will vote on a memorandum of understanding with the Braves that would green-lights the deal Tuesday.

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By the numbers ...

Cobb County would pay an annual $17.9 million over the 30-year life of the deal to pay off the revenue bonds issued to finance the stadium.

That payment will be made from a variety of revenue streams:

• $940,000 from the existing 8 percent hotel/motel tax

• $8.7 million from extending a .33 millage rate currently paying for bonds issued to purchase parkland

• $400,000 from a new 3 percent rental car tax

• $5.15 million from a new Cumberland Special District Tax of three mills

• $2.74 million for a $3 per night per room fee on hotels in the district

Comments
(11)
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SG68
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November 25, 2013
Seems like a solid financing scenario to me.

However it may take a delay in the vote to explain how it works to some of the "slower" folks who are ranting against the proposal.

A lot of the opponents have probably been planted by those Atlanta folks who are now upset that the Braves finally realized that they were getting ripped off by the same gangstas in Atlanta that control and abuse the vending contracts at Hartsfield. They see their "happy sack" flying off to Cobb County

The other opponents are made up of well intentioned, but short sighted Tea Partiers who are going to oppose any public involvement in projects like this.

I am not a huge Tim Lee fan, but I think he has this one right.

ole man
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November 25, 2013
IF the revenue streams don't pan out the back up plan is always county taxpayers. Hotel Motel tax if the tax can be so easily moved from whatever to the stadium, maybe whatever did not really need the money. It's always nice to have a rainy day fund.

The current stadium is just a teenager that needs a million and a half tax dollars for repairs. Who will pay the on going maintenance bill for the Cobb money pit? Those "other sources" are taxpayers.
Mider
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November 25, 2013
If the rate reverts back in 2017, than they should have to allow the voters to reinstate the rate if wanted via a vote, not by the board.
Me, "PC"? NOT!
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November 25, 2013
The ONLY, REPEAT ONLY, reason all of these political "Big Wigs" are excited about this is the prospect of their sitting in VIP BOXES while the rest of us, who actually paid for this boondoggle, freeze our butts off in the cheap seats!
MAY-RETTA SURVIVOR
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November 25, 2013
"I tried to come up with several different income revenue streams..." AKA: BS!
What for?????
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November 25, 2013
As God as my witness ... I've NEVER heard ANYONE say they didn't go to a Braves game because they didn't want to drive from Cobb to Turner Field.
BOC Jokers
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November 24, 2013
Hey Chairman you sell the private jet plan you own to some of the off. Blacked out flight plan and what have you.
John Boy
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November 24, 2013
A whole lot of "ifs" in Tim Lee's presumptions of revenue streams.

Plus, if the Braves bonds are issued at the beginning of 2017, and the park bonds are not paid off until the latter part of 2017 or early 2018, Cobb County will be paying two huge debt loads for about 9-11 months.

Cash flow is a very tricky thing to balance in a county. It would be very bad to issue stadium bonds, only to default on them in the first 6 to 9 months of their issue because you didn't anticipate the cash flow out of the county while you were still paying-off previous park bonds.
Lib in Cobb
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November 24, 2013
Of course, when the mentioned revenue streams prove to be inadequate, there is also a special tax paid by the Cobb residents.
Dang.
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November 24, 2013
An idea to help fund this thing: Why not have an $6.00 idiot tax. If we get all 5 members of the board to vote for this thing we would raise $30 whole dollars. Does Tim really think that the re-purposing of tax money used for other items will somehow be found? No wonder Mr. Lee knows how to spell bankruptcy so well. I do like the idea but have a huge problem with the public funding this venture.
lost 2
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November 24, 2013
The Braves have lost 2 stars since the talks. If this continues and they have a loosing season, what will happen to the fan base that will bring in all this money?
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