Four months ago, attorney Mike Lause took the stand in St. Louis Circuit Court to explain how backers of a new downtown stadium would facilitate public financing of their project.
Lause is a public finance bond lawyer from Thompson Coburn, co-counsel to the Regional Sports Authority (RSA). He was part of attorney Bob Blitz’s legal team in the RSA’s lawsuit challenging a city ordinance requiring a public vote for a new stadium.
Here’s what Lause told Judge Thomas Frawley about the city’s anticipated payments for the project:
“ We haven’t been able to talk to the city because of the ordinance, but in our thinking, we have been assuming it would continue to be around $6 million. There may be other components of what the ask is from the city, but $6 million is what we’ve been thinking.”
I know this is a complicated matter, but that seems pretty simple, and it was consistent with everything said outside of the courtroom: The city’s share of the stadium project was expected to be $6 million per year.
That number coincides with what the city has been contributing since the early ‘90s to help retire debt on the Edward Jones Dome. Politically, it was the basis for arguing that no vote was needed to approve funding of the new stadium, since the city would simply be extending its current level of stadium spending.
In fairness, lead stadium advocate Dave Peacock didn't even wait until the end of the same month to tell the St. Louis Business Journal, "We have said for quite some time that the city's portion would come from the existing Dome payments being extended plus revenue generated by the game-day experience."
Perhaps Lause, testifying on Peacock's behalf, had missed that memo.
A few weeks ago, the RSA presented a draft proposal to city officials that included a schedule of payments reflecting this $6 million annual commitment. But it also had another part to its “ask”: a second schedule of payments, beginning in 2021 at $4.785 million and increasing to $9.975 million in 2051.
Those payments totaled $215 million and were the basis of our report Tuesday. The report drew a good bit of national coverage and Peacock was pressed by the media for a response.
“That’s one of the ideas that’s being explored, but it’s not the definitive idea,” Peacock said Wednesday at a noon press conference, “so it’s basically dipping your finger in the batter and saying you’ve tried the cake. I think the cake needs to bake a little.”
Later in the day, Peacock suggested that the information presented to the city was out of date, and that in any event it was nothing new. He told KMOX that it had always been anticipated that the city would provide 15 percent of the funding for the new stadium and that this was the way it would reach a $150 million commitment.
The comments on radio tracked more closely with the position of Mayor Francis Slay’s office. Mary Ellen Ponder, Slay’s chief of staff had criticized our report, saying the information in it was “dated, inaccurate, and not in play.” She said the mayor was exploring other ways to get “event day revenues” to fill funding gaps for the project.
That position was directly refuted by Tom Shepard, chief of staff for Aldermanic President Lewis Reed, who said his office was questioning the task force about the plan as recently as last week and that the mayor’s office continued to lobby for it with aldermen.
“The plan didn’t become 'dead on arrival' until you wrote your story,” Shepard told me.
One thing is not debatable: Even though city financing is considered a key component of the project, to this moment not a single word of legislation has been delivered for consideration by the Board of Aldermen.
And NFL owners, apparently indignant that cities aren’t offering up corporate welfare at a satisfactory pace, called out the stadium effort in St. Louis—and other cities—scolding the hopefuls like children late with their homework.
Bob McNair, the influential owner of the Houston Texans, complained to a St. Louis Post-Dispatch reporter that Peacock’s group was a few weeks late in getting firm financial details to the league. And, according to the Post-Dispatch, NFL Commissioner Roger Goodell had this to say: “It’s very important for them to stay on a timetable. It’s very important to have a proposal that’s actionable, and that brings certainty. We have said that repeatedly. They’ve done a terrific job. But ultimately, it’s making sure that we have a proposal that meets those standards by the end of the year.”
It’s unclear why it has taken so long for the stadium task force to deliver its financial request to the city, especially if it’s simply what it has been saying all along, as Peacock suggested in response to SLM's report. But I'm told the $6 million annual payments only support bonding of about $69 million—and Peacock said Wednesday he's looking for $150 million from the city—so there appears to be a gap of slightly more than $80 million to fill from the city.
Presumably, the second schedule submitted to the city was simply a rather veiled attempt to issue another $80 million in bonds (to be serviced by the $215 million in payments over time, as we reported). Why not simply say so? Because Slay is publicly pinned to a commitment not to raise taxes for the project. It appears the plan was to push the agreement quietly through with as little attention as possible.
That didn't happen, so now the task force is tasked with finding a way to rationalize the new funding by tying it to "event day" revenues. Expect to hear shortly about some new financing "tools" that purport to isolate new dollars on the spending of football fans and others attending stadium events.
The hole in that logic is that current "event day" revenues—amusement, restaurant, parking, earnings, and sales taxes—only amount to $4.1 million (according to task force numbers). That means they would need to grow by nearly 50 percent just to cover the original $6 million in city payments.
The bottom line is clear: City taxpayers will be asked to support the stadium at a far higher level than stated before and at a cost far higher than they could hope to recapture in new revenues. Now, whether that's acceptable is up to the mayor and Board of Aldermen, and I suppose reasonable people will disagree.
Personally, if I were a city resident, I'd have been OK with voting for the first $6 million—repulsive as corporate welfare to billionaires might be—because it would have functioned just like most other Tax Increment Financing works. (That won't keep me from being labeled an anti-stadium hater or worse on Twitter.) But this extra spending seems awfully hard to justify. And if the city decides to do so, it should be done with eyes wide open.
But whatever happens, let's not pretend this last-minute activity is something that was planned all along. Or that the task force's proposal to the city of more than 50 pages was just an exercise in poking a finger in the cake batter.
Consider what the stadium backers stated publicly on July 14 in a request for funding from the Missouri Development Finance Board (MDFB):
“The current task force proposal and this analysis assume that the city will make lease payments of $5 million each year through 2023, $5.5 million in 2024 and $6 million annually through 2051. The city will ultimately decide whether to enter into the proposed new lease and whether to provide other incentives that may be requested for the development, which this analysis does not take into account. The RSA has not discussed the contents of this MDFB application with the city.”
It would seem that July 14 might have been a rather late date for having not discussed funding with the city, considering the NFL’s expectation that financial numbers be submitted by September. And if those “other incentives” were clearly understood, my search of media archives must be deficient.
Some astute critics have accused SLM of including bad information in our report, in light of the fact that the numbers we reported—straight from the proposal sent by the task force to the city—didn’t jive with those in the MDFB application.
That’s sort of the point.
SLM co-owner Ray Hartmann is a panelist on KETC Channel 9’s Donnybrook, which airs Thursdays at 7 p.m.
