VOL. 129 | NO. 18 | Tuesday, January 28, 2014
Commission Approves Other Part of Ballpark Deal
By Bill Dries
Shelby County Commissioners reluctantly approved county government’s part of the AutoZone Park deal Monday, Jan. 27, despite delaying a vote on it at committee sessions last week.
The item was added onto the commission’s agenda by chairman James Harvey who said he could because it was “time sensitive.”
Leaders of the Memphis Redbirds Foundation lobbied commissioners individually after last week’s committee delay insisting they have to close the deal among four basic parties in the transaction as well as others by Feb. 15 or risk losing the rating on the revenue bonds to be issued and already approved by the Center City Revenue Finance Corp.
“There’s also a closing that involves many parties, mostly the bond holders … the franchise buyer and the Memphis Redbirds Foundation and of course the city of Memphis,” said John Pontius, treasurer of the foundation after the commission vote.
“Those four are the major parties. But there are a number of other people that have to do something to help us to get to a closing.”
The hurdle to closing the deal on the government side was the county’s participation in the original ballpark construction deal in the late 1990s. The Memphis City Council approved Jan. 7 the city’s purchase of the ballpark conditioned on the St. Louis Cardinals buying the Memphis Redbirds franchise.
The county bought the land under the ballpark along with the city in the late 1990s. So as part of refinancing the ballpark, the county would turn its interest over to the city but retain its right to half of any available profits from the ballpark if there are any.
The county would also continue to assign its $462,000 annual payment through a payment-in-lieu-of-taxes agreement for tax breaks on the William R. Moore building and adjoining parking garage to pay the new debt service from the new bonds. They finance the city’s purchase of the ballpark and $4.5 million of ballpark improvements by the city
Even though they approved that, commissioners complained that they didn’t get a briefing from those involved in the deal and only got details five days before last week’s committee session.
“I’m going to vote for it,” said commissioner Mike Ritz. “But I am not a fan of the situation. I don’t think that you negotiated well. … I don’t think the government – city or county – negotiate real estate deals with sophisticated borrowers and lenders very well. I think we get frankly out-negotiated and out-lawyered. I don’t know what we do about that.”
Pontius walked the commission through the details of what he said was “a continuation of the deal in place today.”
That included a sales tax rebate on items sold at the ballpark including tickets. That is the central revenue stream for paying off the bonds. Under the current deal that dates back to the ballpark’s construction, about 95 percent of the sales tax revenue goes into paying the debt including the share of that revenue that would otherwise go to fund local education, according to Shelby County Finance Director Mike Swift. The remaining five percent goes to the state.
Commissioners questioned Swift and others closely on the detail which remains in the new financing agreement.
“Maybe we got a bad deal 14 years ago,” commissioner Terry Roland said. Roland cast the only no vote against the deal.
Commissioner Walter Bailey wanted to see a market study to back up claims by the Cardinals that they can boost attendance by about 100,000 a year which is the premise behind the sales tax revenue projections that the Cardinals and the city expect to grow as well.
“What analysis do you have … that would suggest this deal will float better … when it failed under Dean Jernigan’s operation?” Bailey asked referring to the driving force behind the ballpark and formation of the nonprofit foundation.
Pontius and others have conceded the ballpark that was built was under financed from the start and over the years came to operate in what Pontius described as “severe financial distress.” His specific answer to Bailey was that the leadership of the Cardinals would be the difference. And Pontius said the organization has increased attendance at other minor league franchises its owns in smaller markets.
Cardinals CEO John Mozeliak has said that while there isn’t enough time before the start of the next season for physical improvements to the ballpark, the season that begins in April will see a noticeable difference in the ballpark experience and how it is marketed.
Meanwhile, Memphis City Council member Shea Flinn, monitoring the commission’s debate via Twitter, had some insights on what changed the votes of council members earlier this month who had similar problems with the call for a rapid vote on the deal.
“I guess I can say this now,” Flinn tweeted. “But the big change in city council votes was the Cardinals very real intent to walk away.”
In other action, the commission voted down a resolution by commissioner Steve Basar urging the Tennessee Building Commission to reject city government’s coming application for a Fairgrounds Tourism Development Zone.
And the commission rejected an appeal of a Land Use Control Board decision last October against the extension of a wall into a conservation easement from a pool on Buckland Cove near Raleigh-LaGrange Road.
The commission rejected the appeal of the homeowners, Husni and Nuha Dweik, on a 6-6 tie vote after a detailed review of the project. The review included details of a neighbor opposing the pool and the wall filing a restraining order against the Dweiks, other neighbors who say they have no problem with the pool, the quality of the slurry required to be used on the wall and the positioning of drainage pipes as well as whether the existing wall should instead be a fence.
The commission’s addition of the ballpark deal to its Monday agenda did not extend to adding a resolution that would change the size and districts of the Shelby County Schools board.
Ritz said earlier this month he is ready to propose changing the 13-member school board, which is to debut in September, to a nine-member school board whose districts cover only the city of Memphis and the unincorporated areas of Shelby County.
The current seven-member school board covers all of Shelby County as would the 13-member school board.
The district lines to be proposed by Ritz would reflect the formation of six suburban school systems that are in the process of being readied for an August start of the next school year, each with their own elected school board.
The change, if approved, would also come as the filing period for candidates in the 13 races on the August county general election ballot is already underway.