Misinformation or Omissions behind the new Falcons stadium

For over two years maybe even since 2006, Atlanta leaders have debated a plan to building a new stadium; by avoiding a public vote by Atlantans on the over $1B project that effects us all.

Some Atlantans believe that city leaders and others are giving out misinformation on this new stadium deal.

Ron Fennel, executive director of the Atlanta Hotel Council tells AJC; the Atlanta hotel industry pushed for Georgia's permission in 1978 on this “special tax on hotel stays (that) would provide a consistent revenue stream to support proper promotion of Atlanta as a meetings and tourist destination.”

This hotel-motel tax formula is “adjusted” and a portion “allocated” to the GWCCA for “tourism product(s),” such as conventions and organizations.  “Adjusted” and “allocated” sounds like a tax increase, but on tourists.

In 1990, another portion of this hotel-motel tax was “allocated to float bonds to construct the Georgia Dome,” and other “obvious tourism generator."  "Once these bonds are paid, the city must renew the 38-year-old tax for it to continue.”

In 2011, Georgia's Governor Nathan Deal vetoed and later approved, S.B. 140 bill by Republican Chuck Martin, which increased the GWCCA's bond capacity cap and increase the hotel-motel tax to 8%.

Tourists and visitors pay this 8% hotel-motel taxes, which generate $53M a year.  Fennel breaks down this 8% hotel tax and what parts of Atlanta benefit from the tax like:  “4 percent for the state of Georgia general sales tax, and 1 percent each for MARTA, a local option sales tax, a water/sewer tax and a special purpose local option education tax.”

Hotel-motel taxes are increased on tourists, having them pay for MARTA, water/sewer, sales and education taxes; instead of local residents.  Crafty way to increase taxes, but why hasn't leaders pointed this out?

Renewing this local legislation in 2011, was so “no new tax or additional cost to taxpayers (was added).  No referendum is needed.”  This means no voters need to vote on this tax, only city leaders vote.  No need to include Georgia voters, because tourists and visitors pay taxes.

Why then do tourists not have representation and a vote on this new stadium?  Do they vote by not coming to Atlanta and being taxed?

“All of these local and state taxes, paid by visitors, significantly reduce the tax burden on the community.”  Yet if visitors do not come to Atlanta, programs and services suffer by austerity cuts.  So Atlanta is heavily interdependent on tourism, like other parts of the world with their tourism industry.  No self-sufficiency by local tax revenues.   Both a good and bad scenario.

Invest Atlanta, the economic development agency operates in New Market Tax Credits (NMTCs), which allows investors to not pay their taxes they owe the state.  Atlanta has committed $15M in Tax Allocation District (TADs) “for economic development projects that would leverage private sector and philanthropic investment in the English Avenue, Vine City and Castleberry Hill communities.”  Since investors do not pay taxes on their investment, no further local tax revenues.

Invest Atlanta committed this $15M for the Westside TAD (where the current Dome is located) as a "co-investment in the neighborhood," and as “leverage (for) additional public and private funds.”

On Apr 4, 2013, Invest Atlanta voted by a 8-1 vote for the approval of the $200M in bonds for the new stadium, which the GWCCA will own and operate.  Invest Atlanta will also be allowed in the stadium's design, and right to “one special event” per year at the new stadium.  Is this “special event,” a free event?

For 2011 according to the Atlanta Convention and Visitors Bureau, Atlanta attracts over 39.7M visitors.  The hospitality and tourism is the fifth largest Georgia industry, bringing in $12B in spending for over 229K Atlanta jobs.

By 2015, over $1.5B in new Atlanta development projects will open like:  Atlanta Streetcar; Buckhead Atlanta; College Football Hall of Fame; the National Center for Civil and Human Rights; Ponce City Market; and Porsche Cars North America Inc. headquarters.

By 2016 Dr. Bruce Seaman, associate professor at Georgia State University, predicts over 1,400 full-time jobs will be created in Atlanta; with over 4,500 full-time jobs across Georgia by the new stadium.

The current Georgia Dome attracts annually: Bank of America Classic ($21-30M); Chick-fil-A Bowl ($24-35M); Chick-fil-A Kickoff ($25-36M); and the SEC Championship ($29-32M).  According to Dr. Seaman, these four events have a total economic impact of $100-133M.

Dr. Seaman also predicts the economic impact of:  the new BCS Championship at $110-185M; FIFA World Cup at $100-200M;  a Major League Soccer franchise around $25-36M; and a Super Bowl from $125-203M annually.

Mayor Kasim Reed tells the AJC, the Dome needed $350M in maintenance over the next 5-7 years.  Yet Reed overstated this cost like the stadium’s current roof, estimated at $19.5-30M from previous GWCCA studies.

Sonji Jacobs Dade, Reeds' spokeswoman agreed the cost for the roof is $30M, but also agreed with Reed’s overstated cost of $350M; which was given by the GWCCA.

Atlanta's CEO Duriya Farooqui, one of Reed’s top lieutenants tells the AJC the Dome “appropriately repaired and kept up to its current state over the next five to seven years, (is) going to require well in excess of $300 million.”

The GWCCA's commissioned two studies by Kansas City architecture firm Populous, on costs of the Dome.  One in 2010, at $401M to renovate and expand the 21-year-old Dome.  The second in 2011, of $115M for basic maintenance, repairs and updates needed by 2020.

The June 2010 study showed a $401M total, adding 369,000 square feet of additional space at a cost of $118M.  Also “major renovations” of $146M, “minor renovations” of $23M, and $30M to replace roof fabric all to renovate the current stadium, but an “operable roof (option)” would cost additional $200M.

The February 2011 study said that by 2020, $44.5M would be needed to maintain the Dome and $35-70M in capital improvements in electrical, mechanical facilities, a new roof, plumbing, and technological updates.

Calling any stadium cost-prohibitive of current standards or out of date, is normal says Neil DeMause.  DeMause debunk stadium deals across America telling AJC, “It’s absolutely traditional for public officials and teams to cycle through a number of plays in the new stadium playbook” to get their way.

Kevin Delaney and Rick Eckstein's book Public Dollars, Private Stadiums, tells The Nation lawmakers “can then keep the team owner more in the background, so they’re not getting so smacked with the idea that this is some kind of corporate welfare” by tax-exemptions.

Atlanta leaders and the Falcons rumored of leaving Atlanta prior to the Council's vote, so Atlantans would not bite the hand that feeds our tourism.

In 2011, DeMause believes mayors love stadiums.  Since 1990, the Big Four sports leagues of the NBA, NFL, NHL and MLB have received $20B in taxpayer subsidies for their stadiums.

Hidden tax subsides comes from “lease breaks, property tax exemptions and the use of tax-exempt government bonds,” which Invest Atlanta's NMTCs are, a tax-exemption for bonds.

Frank Rashid, an English professor and co-founder of the Tiger Stadium Fan Club, tells The Nation “Public subsidies for stadiums are a great deal for team owners, league executives, developers, bond attorneys, construction firms, politicians and everyone in the stadium food chain, but a really terrible deal for everyone else.”  Meaning, local taxpayers loss out on tax revenue.

Missouri's representative Jeanette Mott Oxford, and an anti-subsidy activist tells The Nation, “Unfortunately, it doesn’t appear that elected officials are much into evidence-based decision-making...Folks believe the threat that jobs will be lost, that somehow the team will move.  Then there’s the civic pride element around the status of having a team.  I think that too often, those motivate people no matter what the evidence says.”

Robert Baade, a Lake Forest College economist tells The Nation “Politicians continue to believe that it would be political disaster to lose a team on their watch.”

H.R. 1060 Distorting Subsidies Limitation Act of 1999 proposed by U.S. Representative David Minge was to end the “economic war among the states.”  This economic war of the states happened in the 1700-1800s with tariff barriers and trade wars.  This lead to the Commerce Clause of the Constitution by James Madison in 1787, for states to relinquish control over national commerce to the federal government; when applied to international, interstate and Indian trade.

This Clause also limited infighting between states on trade and monopolies like 1824 Gibbons v. Ogden case of NY control of river traffic.  Otherwise we would have 50 city-states going to violent war with each other over rights and commerce, like the current Alabama, Georgia, Florida and Tennessee water war rights.

Also the 1831 Cherokee Nation v. Georgia case, when gold was found and asked if the Cherokee nation was a foreign state and had rights.  This case was used to drive them off their land, where they developed a written language, New Echota, Georgia town, and newspaper, which lead to the Trail of Tears.

Same applies to using tax subsidizes today to move companies from one state to the next.  Forcing Americans to migrate to where the jobs are and breaking off their networks of friends and families, to keep up with the "economic war among the states."

The1994 Minneapolis Federal Reserve report by Melvin L. Burstein, inspired Minge's bill to put an excise tax on any subsidies designed to create jobs by individual corporations.  Competition among states for business, was harmful making the overall American economy worse off, but the bill failed.

Since 1992, $71M has been invested into the Dome in maintenance, renovations and repairs.

Jennifer LeMaster, GWCCA's Director of Communications believes the Dome is not currently in need; but tells AJC “any public venue that welcomes millions of people annually will require ongoing repairs as well as upgrades to address customer requirements.”

In 2012 Frank Poe, GWCCA's executive director tells AJC Atlanta will need “a capital infusion of about $400 million (to) go back into the Dome to keep it relevant for the next 20 to 25 years.”

Poe believes, “the Dome would lose $1 million to $2 million per year without an NFL team playing in it.”  So the value of the Dome will decrease by $40M in 20 years, adding to the cost of the current Dome's upgrades and overall cost of maintenance.

A trick in numbers perhaps, by adding the cost of value and maintenance to bring the costs up to $300-400M.

William Perry of Common Cause Georgia believes there are extra hidden public costs, beyond the $200M that Atlanta leaders told the public:

“$882 million in hotel-motel tax revenue through 2050, all of which under current law must go to the stadium (but remember, laws can be changed).”  The “$50 million from the state in sales tax credits for construction.”  The “$24 million in free land from the state on which to build the stadium.” And the “$15 million from Invest Atlanta — city taxpayer dollars — for unspecified 'community development.'”

According to Perry this total of $971M in public costs, which the “City of Atlanta CFO Jim Beard came up with a lesser number on hotel/motel tax revenue projections.”  The suggested $200M “investment that has been constantly thrown around,” has Atlantans ignoring the “$922 million backlog of infrastructure projects Reed often talks about.  (Yet) Is a stadium more important than crumbling infrastructure?”

Perry tells AJC this “$971 million does not include one more big thing: infrastructure costs.  Blank has said he will pick up the tab for the first $70 million...No one can get a definitive estimate.”

Perry gives one example of hidden infrastructure cost.  The “Martin Luther King Jr. Drive bridge (that) will have to be moved to build on the preferred (south) site,” will cost local taxpayers for that bridge.

The current Dome, still owes less than $100M in debt that was due to be paid off by 2020 on their 30 year bonds.  Those bonds were extended until 2050 thanks to H.B. 903 in 2010, which adds more public debt with the extra $200M in Atlanta bonds.

The Falcons said they would pay off the $60M debt for the state-owned Dome and later demolished it, once the new stadium was built.  Yet no plans on this land use afterwords, nor who pays for that destruction.

GWCCA's LeMaster tells Patch that for 2013, the yearly principle paid on the current Dome is $11,175,000 and the interest/fees is $3,169,208; for a total of $14,344,208 paid for one year in principle and interest.

Atlanta's CFO J. Anthony “Jim” Beard tells Patch on the approved $200M bonds for the new stadium, it will be paid off by 2044.  According to the Cash Flow Analysis, the principle on the $200M bonds will have two liens:  a senior lien of $200,850,975 plus a junior lien of $51,931,808; for a total cost of bonds at $252,782,783.

These bonds cover:  project funds, cost of issuance, underwriters discount etc; for a total debt service of $451,042,500 at an all-inclusive interest cost of 4.203%.

For July 2015, Atlanta bonds will start paying $11,310,750 for the first year in interest only.  By July 2018 will start paying the principle of $4,140,000 and interest of $11,310,750, for a total each year of $15,450,750 for 2018 till 2044.  The total paid in principle and interest on this $253M bonds from 2015-44, will be $417,110,250.

When it comes to the costs of the stadium, look at it as just a larger house with larger principle and interest.  Who pays for this, just the tourists?

Some oppose this new stadium saying the decision is being rushed and more time is needed.  Others are more focused only on the stadium’s job-creation and economic-development potential, because the project is their cash cow and they depend on those city taxes and contracts.

It seems emotional ideologies win over public opinion and rush to new projects; instead of people that want to think first with all sides, and use their reasoning skills for a better public project that affects millions.  It seems jumping into a decision that is not well planned, are pushed by emotional ideologue types; like rebuilding Iraq and Georgia's Vogtle nuclear plants.

Maybe this new stadium, is just a clever way to justify funding on an infrastructural project, through tourist-visitor paid hotel-motel taxes.  Instead of asking local taxpayers to increase taxes by local government leaders to create jobs, through a Public-Private Partnership to stimulate the local economy.  Leaders instead rush to build a new stadium, so Atlantans do not ask too many questions on subsidies and costs.

Just because you build it, does not mean tourists will come.  Look at the Atlanta condos and retail stores, which are over built with high rent, now vacant.  How can they attract buyers or shoppers during a weak economy, other than hoping a stadium project will stimulate growth?  A big $1B gamble.

Instead, local leaders rushed to a large over $1B price tag project, which will go over budget, like Plant Vogtle.  Then later increase taxes when we are in the middle of that project, just to complete it.  Hey, we have already gone so far, lets increase taxes to finish this project and keep those jobs.

A sneaky way some would say, by misinformation or omissions for Atlantans to create jobs and appear to be more private, than a public project.  Yet it is a public project, without the public’s opinion or vote in the matter.  Shame.