One of my biggest issues with redevelopment projects is when local city council members, functioning as their redevelopment agency, commit multimillion dollar bond obligations without voter approval. So while many will leave office due to Term Limits or for other reasons, the bonded indebtedness they create lives on, long after they depart, for the next 40 or so years.
Isn’t it great for our ego when some professional sports mogul show up at city hall and gives you the privilege to build a stadium for their team? It’s like spending nearly $400,000 for two minutes of fame in the Tournament of Roses Parade, or the Mission Viejo Vigilante’s, but I digress.
The following NY Times story is close to my heart. One of my brothers worked for the primary electrical contractor building the entire sports complex in Secaucus, N.J. known as the Meadowlands. Another brother, who still lives in our home state of NJ, will possibly end up picking up part of the tab as the stadium is no longer in use while the debt service continues.
Following is part of the NY Times report. The full story link can be found at the end of this post.
“As Stadiums Vanish, Their Debt Lives On
By KEN BELSON It’s the gift that keeps on taking. The old Giants Stadium, demolished to make way for New Meadowlands Stadium, still carries about $110 million in debt, or nearly $13 for every New Jersey resident, even though it is now a parking lot.
The financial hole was dug over decades by politicians who passed along the cost of building and fixing the stadium, and it is getting deeper. With the razing of the old stadium and the Giantsand the Jets moving into their splashy new home next door, a big source of revenue to pay down the debt has shriveled.
New Jerseyans are hardly alone in paying for stadiums that no longer exist. Residents of Seattle’s King County owe more than $80 million for the Kingdome, which was razed in 2000. The story has been similar in Indianapolis and Philadelphia. In Houston, Kansas City, Mo., Memphis and Pittsburgh, residents are paying for stadiums and arenas that were abandoned by the teams they were built for.
But befitting its name, Giants Stadium is the granddaddy of phantom facilities. Taxpayers in New Jersey, already under pressure from declining local government revenues, this year will pay $35.8 million in principal and interest on the $266 million in remaining bonds for the Meadowlands Sports Complex, which opened in 1976 and includes the Izod Center and a horse racing track. Those bonds will not be paid until 2025.
How municipalities acquire so much debt on buildings that have been torn down or are underused illustrates the excesses of publicly financed stadiums and the almost mystical sway professional sports teams have over politicians, voters and fans.
Rather than confront teams, they have often buckled when owners — usually threatening to move — have demanded that the public pay for new suites, parking or arenas and stadiums.
“The Meadowlands wasn’t a bad idea, but rather than pay it off, they let it ride,” said Steven Malanga, a senior fellow at the Manhattan Institute, who has written about the perils of publicly financed stadiums. “Politicians essentially turned a good thing into a money loser for taxpayers at exactly the wrong time.”
Paying for arenas and stadiums that are now gone or empty is a result of a trend that stretches back decades. Until the 1960s, public works were often defined as bridges, roads, sewers and so on: basic infrastructure that was used by all and was unlikely to be built by the private sector. With few exceptions, like County Stadium in Milwaukee, teams constructed their own stadiums.
As pro sports expanded into cities from coast to coast, politicians and business leaders pushed for taxpayer-financed stadiums to lure teams. To name a few, New York built Shea Stadium for the expansion Mets, Atlanta put up Fulton County Stadium to lure the Braves from Milwaukee, and Oakland built a stadium to entice the Athletics to move from Kansas City, Mo.
But while other cities raised or introduced taxes to pay for their stadiums, the project’s chief cheerleader, Gov. William T. Cahill, promised that the racetrack would pay for itself and Giants Stadium, and that taxpayers would not be liable. In effect, the state gambled on gambling.
George R. Zoffinger, the chief executive of the authority until 2007, says that there is roughly $110 million in debt on the stadium.
With more than four decades of evidence to back them up, economists almost uniformly agree that publicly financed stadiums rarely pay for themselves.
“Stadiums are sold as enormous draws for events, but the economics are clear that they aren’t helping,” said Andrew Moylan, the director of government affairs at the National Taxpayers Union.
Eager to cut the state’s losses, Gov. Chris Christie in July endorsed proposals to lease the Izod Center and the racetrack in the Meadowlands to outside operators. But Gov. Christie was less precise about how the state would pay off the authority’s bonds, including those issued to pay for Giants Stadium.
“Believe me, I’m not unaware of the debt situation that was left here in my lap by decisions made by previous administrations,” Gov. Christie said, speaking from the 50-yard line at New Meadowlands Stadium. “But we’re just going to have to deal with it.”
Jo Craven McGinty and Griff Palmer contributed reporting.
http://www.nytimes.com/2010/09/08/sports/08stadium.html?sq=as stadiums vanish ,their debt lives on&st=cse&scp=1&pagewanted=print
Larry,
Great article. This is the same “tool” used locally to finance hotels here in Garden Grove. These public funds are allocated without public vote. They are called Certificates of Purchase, the acronym of COP. These COP are in the multimillion dollars of indebtedness.
Cities are strapped to repay these debts which result in reduced city public services.
GG Voter.
I am very familiar with redevelopment in your city. In fact, way back in 2002, I spoke at a council meeting led by mayor bulldozer Broadwater.
In my office is a picket sign that was a gift from Verla Lambert. You might know their efforts to block a major eminent domain effort that was reported in the Register by Steve Greenhut. I have followed some of the losing RDA projects in your city.
As to a COP. The correct name is “Certificate of Participation.” They are issued without voter approval. When our new “Redevelopment: The Unknown Government” books are printed I will make sure you get a copy.