City Council’s three stadium skeptics

Yesterday the city of Austin finalized its deal with Precourt Sports Ventures. From Chris Bils & Phil Jankowski of the Statesman:

Under the agreement, PSV will privately finance the stadium at McKalla Place — estimated to cost about $225 million. The city will own the facility and lease it back to the team, with PSV agreeing to pay a total of $8.25 million in rent over a 20-year lease term. PSV also will give $3.64 million to Capital Metro over 15 years to be used for transit facilities.

As part of the deal, PSV will not have to pay property taxes on the 22-acre tract near the Domain in North Austin. The stadium is slated for completion in the spring of 2021.

Now that the deal is done, how much impact might Council have on the team’s future? Will there be important votes to take on the team in the coming years? I suppose if everything goes well, no. But it’s not hard to imagine a scenario where Precourt comes back to the city with his hand out, perhaps in hopes of reducing his financial obligation to the city.

Right now, the deal that Austin got is probably significantly better than the average deal between cities and sports teams. We are not directly subsidizing the stadium and we didn’t seem to fall for the usual fairytale told by sports teams about how the stadium will generate incredible economic activity (they almost never do).

Mainly we are paying in opportunity costs, notably the opportunity lost by dedicating a large piece of vacant land to a soccer stadium. If possible, I would have preferred McKalla Place as a mixed-use development that provides transit-supportive density and a shitload of property tax revenue. (Sorry MLS fans, but I still love you guys)

Keep in mind that when opponents of the MLS deal talk about the city forfeiting hundreds of millions of dollars in property tax revenue, it is only actually forgoing that much money if Council had been willing to allow the land to achieve its highest use –– the exact kind of use that tends to mortify those same politicians and activists.

I’ve lost track of the various MLS-related votes that City Council has taken over the past year, but at the end of the day there were four CMs opposed to the deal: Leslie Pool, Alison Alter, Ora Houston and Ellen Troxclair.

Pool was the most passionate opponent. The site is in her district and she is likely sympathetic to those in the neighborhood who don’t relish a stadium in their backyard. Publicly, her arguments were focused on the stadium being a “giveaway” of public land that might have been destined for a greater use (notably affordable housing). Pool also suggested that Austin was screwing over Columbus by taking away their soccer team; she famously took a trip to Ohio to hear from the heartbroken Columbus Crew fans.

Alter’s opposition was similar. She referenced economic literature about cities getting screwed on stadium deals and said the city should investigate other uses of the land. Alter is also typically sympathetic to neighborhood opposition to development, but I don’t recall that being one of her arguments.

Houston is generally a reliable vote against any controversial development. No surprise there. Troxclair’s opposition was relatively narrow –– she believed the city wasn’t PSV enough for access to the land. She nevertheless congratulated all of the soccer supporters for mounting a successful campaign.

Houston and Troxclair are leaving Council now, but it looks like at least one of their replacements was against the stadium deal. Here’s what Paige Ellis says on her campaign website:

The city sent the wrong message to Austinites when it allowed for a tax break to the soccer stadium while residents are breaking their backs with rising costs. Let me be clear – I support soccer – but the deal sent the wrong message to everyone. Corporations moving to Austin must pay their fair share.

Paige Ellis.

I don’t know if the issue came up in Natasha Harper-Madison’s campaign or what her position is. I’m interviewing her later today, so I’ll ask her.

Finally, it’s notable that Kathie Tovo parted ways with the anti-development bloc on Council in supporting the deal, which she enthusiastically applauds:

“This agreement solidifies our partnership to bring Major League Soccer to Austin,” Mayor Pro Tem Kathie Tovo said in a statement. “Along with a professional sports franchise, PSV will also bring youth soccer programs, discounted and free tickets, and numerous other community benefits that will enrich our city for years to come.”

4 thoughts on “City Council’s three stadium skeptics

    1. I’d be interested in your thoughts after looking at the deal. I guess it depends on how much rent the city is charging them. $500k/yr does seem very low.

      1. $500k /year on a plot of land currently tax assessed at $10M is pretty good.

        Even if you bump it up to $20M (assuming the rezoning that didn’t actually happen) it’s still not bad.

        Add in the money to CapMetro, to affordable housing, etc. and I’m happy with it.

  1. “it is only actually forgoing that much money if Council had been willing to allow the land to achieve its highest use”

    It’s also only forgoing that much money if mixed use development doesn’t follow standard economics (hint, it does).

    Zoning McKalla for mixed use doesn’t suddenly cause $X00M of mixed use development to suddenly pop into existence. There still has to be an economic case for that development to occur.

    Mixed use development in North Burnet Gateway is not land-constrained, and won’t be for many years if not decades. NBG is >2000 acres, so McKalla is literally 1% of it. Any mixed use development that would have occurred on McKalla just would have been that much development that wouldn’t have happened on the nearly-empty plots right next door. Or those other plots will be redeveloped later, smaller, shorter.

    As long as there’s a thousand acres of warehouses in NBG, McKalla isn’t costing us “hundreds of millions of dollars”.

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