Smith: An approach to financing Scottsdale Stadium

Scottsdale City Council is currently in the throes of refining a list of $437 million of capital projects to present to voters in a bond election.

All councilmembers seem to agree our neglected capital needs amount to several hundred million dollars: debate centers on when to hold an election and how much to ask voters to approve.

David Smith

When…is the easy part. The sooner the better, considering the last major capital project bond election approved was for $358 million in September 2000 — 20 years ago!

Bond elections in the past two decades have been voted down entirely (2010 and 2013) or substantially (less than $30 million approved in 2015). With our city’s depreciation running at $100 million/year, the need to address our deteriorating infrastructure is long overdue.

How much…seems to be a harder question for council. Discussions get tangled up with predictions of “how much will voters likely approve” which is, arguably, irrelevant to council’s responsibility. The fiduciary responsibility of council is to identify capital needs; the future benefits/costs of investment; alternatives for funding from other sources; and then submit their findings to voters.

It’s worth remembering, a bond election does not impose a tax on citizens: a bond election merely asks voters whether they will impose a tax on themselves. Citizens vote for/against a bond program, based on how they believe the proposed investments will affect their quality of life.

Curiously, one large unfunded capital project affecting our quality of life is not on the list being considered — the need to renovate and improve our city’s baseball stadium.

Two years ago, the project was estimated to cost $60 million — it may be even costlier now, given the passage of time.

We cannot ignore the need to renovate and improve the stadium, but we should not finance this project in ways that jeopardize other critical needs in the city. So, where will the stadium capital funding be found?

  • Certainly, the San Francisco Giants and stadium vendors should be asked to contribute — in proportion to how they stand to benefit from stadium improvements.
  • Likewise, the Tourism Development Fund which accumulates bed tax revenues from visitors should be tapped, although we should be fiscally prudent not to use all the bed tax cash and borrowing capacity for the next 20 years to support just one tourism venue.
  • The city’s General Fund has an Unreserved Carryover Balance — but that’s not what this fund is for. This fund accumulates prior year operating savings, which can be tapped for emergency capital needs like the 68th Street bridge or the Drinkwater underpass. Or to deal with future one-time operating needs, like our mounting pension liabilities. Or to fund other capital projects in order of priority.

Which leaves Scottsdale citizens.

Arguably, we are the stadium’s biggest group of beneficiaries — and not just because we can attend home games. As an economic engine, spring training generates millions of dollars of related business revenues and city taxes. As the only stadium located in the heart of a host city’s downtown, it is truly an iconic city asset that adds to the unique attractiveness of Scottsdale as a place to live and visit.

Let me suggest a fiscally responsible approach for our leaders to take…ask the voters what they think! With a separate, stand-alone question, ask voters if they are willing to finance a portion of the stadium project…say 50 percent of the total cost, up to $30 million?

Voters could be honestly told that a yes vote on this stadium question would equate to a secondary property tax on a $300,000 home of less than $1 a month. Furthermore, voters could be honestly told a bond package with up to $500 million of new capital investments would not increase the city’s secondary property taxes — in fact, they would go down. That would happen because newly approved bonds would be issued after an even larger amount of old bonds mature.

Community leaders have a responsibility to convince voters a yes vote on the stadium project is in their economic best interest. Will voters be willing to share the burden with tourists and other parties that benefit from this iconic asset? We should not refuse to ask them, simply because someone argues they might say no.

Editor’s Note: David N. Smith was Scottsdale City Treasurer (2009-2013) and Councilman (2015-2018)

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