VOL. 128 | NO. 241 | Wednesday, December 11, 2013
Council Changes Ballpark Terms, Delays Approval
By Bill Dries
Memphis City Council members received some more answers Monday, Dec. 9, to their questions about the proposal for the city to buy AutoZone Park. But some of those answers were different than the ones they got to the same questions last week.
Memphis Mayor A C Wharton Jr. says it is up to the St. Louis Cardinals and Fundamental Advisors to weigh a counteroffer from the council.
(Daily News/Andrew J. Breig)
The new answers that bothered council members the most involved estimates of the sales tax rebate revenue that makes up 60 percent of what would be used to pay off the revenue bonds to finance the city’s purchase of the ballpark and some of its improvements.
Council members changed the terms of the proposed deal, which also includes the St. Louis Cardinals buying the Memphis Redbirds franchise. Then the council delayed a vote on the amended terms until Dec. 17, the last council meeting of the year.
The council is waiting on a response from the Cardinals organization and executives from Fundamental Advisors, the private equity firm that effectively owns the ballpark, before voting on what amounts to a counteroffer to the deal worked out among Memphis Mayor A C Wharton Jr.’s administration, the Cardinals front office and Fundamental Advisors.
Wharton said after the council decision that he couldn’t speak for the Cardinals or Fundamental Advisors.
“We’re going to give it our best shot,” he said. “We still believe it’s a good deal. … I will simply see what their reaction is.”
Council members’ reactions involved high levels of distrust of the administration’s revenue estimates. Councilman Kemp Conrad called the administration’s attitude “arrogance.”
Conrad walked through a chronology in which the deal began to take shape in September and included a Nov. 7 conference call with 43 participants in the deal – none of them being on the City Council.
Meanwhile, Conrad said his request to review written state sales tax rebate figures for recent past years was dismissed in writing by the Wharton administration as “not practical given time frame.”
“You all had months to process all of this information,” he said. “Give us two weeks for the information that you have had month and months and months to process. And if the deal dies because of it, that’s y’all’s fault. I think our constituents expect a basic level of due diligence that we are asking for.”
Council member Jim Strickland said assurances from the administration that three non-property tax revenue streams would adequately cover the bond debt service were “absolutely not true.”
“Before five minutes ago, we were given four versions of the sales tax rebate figures,” he said, adding the fifth version came at Monday’s council session.
Memphis City Council member Kemp Conrad was among the more vocal council members as the council again delayed a vote on the AutoZone Park deal and changed the terms in what amounts to a counter offer. Conrad said the administration has been arrogant in answering questions from council member about the complex deal.
(Daily News/Andrew J. Breig)
“Never, never has the sales tax rebate figures grown by 3.8 percent every year,” he said, referring to the administration’s most recent estimate of sales tax rebate revenue growth. “In fact, it’s not grown every year. It goes up and down.”
Under terms of the proposal, if the revenue declines, the city would have to use general fund revenue – property tax revenue – to make up the difference.
“Should we risk the precious dollars we have on a baseball park?” he asked. “This deal is risky for taxpayers. The substance, the timing and the inconsistencies of the financial information we have been given does not come close to proving that Memphis taxpayers are protected.”
Strickland proposed three of the amendments that would drop the price the city would pay for the ballpark, as well as the city’s share of paying for ballpark improvements.
The council’s changes in the terms of the proposal are:
• $100,000 a year from AutoZone’s ongoing pre-existing naming rights agreement would be diverted to a plan to promote baseball among children in inner city Memphis.
• If the Cardinals tried to move the franchise out of Memphis during the 17-year term of the agreement, they would have to pay the rent due for the remaining years left in the agreement as well as any shortfall in the operation of the ballpark during that same period.
• The price the city would pay for the ballpark would drop from $20 million to $15 million, and the city’s commitment to fund capital improvements to the ballpark would drop to $2.5 million from an original $5 million share.
• An estimated $600,000 the city would save on the debt service from the two city funding cuts would be diverted toward ballpark improvements.
• All excess revenue up to $2.5 million would be diverted to ballpark improvements.
Meanwhile, some of the dollar amounts in the proposal changed at the outset of the late day Monday at City Hall.
Fundamental Advisors dropped their price for the ballpark to $24.5 million from $25 million. And the Cardinals agreed to take on $500,000 more in the split between the city and the Cardinals in funding improvements to AutoZone Park. The city’s share dropped to $4.5 million from $5 million, with the Cardinals picking up the $500,000 for a total share for them of $15.5 million.