$30 million annual tab looms over Rays stadium

Most of the media buzz and debate about a new stadium for the Tampa Bay Rays has focused on where it might be if one is built.

Potential sites range from downtown St. Petersburg to the state fairgrounds. Observers love to argue each location's pros and cons.

But the talk about a ballpark is worthless unless someone figures out how to pay for it.

In the Mickey region, politicians can stick tourists with the bill for new stadiums by charging taxes on hotel stays. But 90 miles down Interstate 4, politicians in Hillsborough or Pinellas County likely would have to scrape together funding from numerous sources to cover the roughly $30 million annual cost of a new ballpark. And with 13 percent unemployment in the area, no one is sure that should be a priority.

"Yes, it is possible," said Marianne Edmonds, who advises local governments on finance and researched financing options for the ABC Coalition, a citizens group created to study a potential new Rays stadium.

"It is not easy. You have to think beyond the recession in terms of available revenues," she said, stressing that she isn't advising local governments to take any particular action.

Here are some likely funding sources if the community decides to pursue a new stadium, based on interviews with local government leaders, those in other communities that built ballparks and the ABC Coalition:

Hotel taxes

When the Orlando Magic step into their gleaming, new Amway Center after it opens in downtown Orlando in October, they can thank the city's tourists.

Getting tourists to foot the bill by paying tax on their hotel stays is seen as less malodorous than sticking local taxpayers with the bill. Hoteliers aren't as fond of the idea.

Orlando and Orange counties are doing this with the new $480 million, 20,000-seat curved steel and glass palace. Orlando tourists already pay a 5 percent tax on hotel stays, and the community recently tacked on a 1 percent tax to help pay for the Magic's new digs. Half of the new tax will go to the new arena, the other half toward marketing the Orlando area.

This may sound good during a fat and happy economy, but today's dismal financial conditions have dampened Orlando's tourism industry, and bed taxes fell 15 percent last year. The community issued bonds to raise $270 million toward the Amway Center, pledging to pay off the bonds through bed taxes, said Heather Allebaugh, a spokeswoman in the Orlando mayor's office.

But with the recession, those bonds are riskier to investors, and Fitch Ratings recently downgraded them to below investment grade, or "junk" status. Orlando has money in reserve and insurance to cover any shortfall in bed taxes, Allebaugh said.

Miami-Dade County also pledged millions in hotel bed taxes when residents approved a new ballpark last year for the Florida Marlins.

In the Tampa Bay area, bed taxes aren't the cash cow they typically are in Orlando or Miami, so they wouldn't cover most of the stadium costs, which might run up to $500 million. A 1 percent bed tax will bring in more than $25 million a year in Orange County, but in Pinellas or Hillsborough, a 1 percent tax would net only about $5 million a year, according to the ABC Coalition's finance committee.

Bed taxes have been used to pay for local stadiums. Pinellas County allocates more than $4.9 million a year from bed taxes to help pay off the bonds on Tropicana Field. When the bonds are paid off in 2016, the community might decide to extend the tax and use it for a new stadium - assuming the Rays stay in Pinellas County.

Sales tax

About 1,300 miles north of Tampa, the Minnesota Twins have squeezed their new ballpark, Target Field, onto eight acres overlooking the Minneapolis skyline.

To help build it, Hennepin County voters approved a 0.15 percent sales tax, or 3 cents on a $20 purchase. That may not seem like much, but in corporate-rich Minneapolis, it is expected to bring in $28 million a year. That is more than enough to cover the $20 million the county has to kick in annually for the new stadium, said Dan Kenney, executive director of the Minnesota Ballpark Authority.

The Hillsborough County Commission is considering putting a 1 cent sales tax on the November ballot. The tax would pay for a light-rail system and other transportation projects, and no one has suggested throwing a stadium into the mix.

If the county warms to a new stadium tax, a half-cent sales tax in Hillsborough County would likely raise at least $75 million a year. Only a portion of that likely would go toward a ballpark.

Hillsborough County collects a half-cent sales tax for capital improvement projects. The tax contributed $8.9 million toward debt payments on Raymond James Stadium last year, with the rest going to the Hillsborough school district and the county's cities, said Tim Simon, the county's debt director.

Property taxes

If sales or bed taxes don't sound appealing, or if they won't raise enough money, politicians might look to the land. Property values in the Bay area have fallen off a cliff, but that could be a big potential funding source for a stadium - if politicians were willing.

Tampa has embraced a technique in which property taxes are collected in certain neighborhoods and steered back to the neighborhood to fund projects instead of going toward the overall city and county budgets.

For example, if the property values in Neighborhood X rise from $100 million to $110 million, Neighborhood X normally would pay more taxes to the county. But under the technique called "tax-increment financing," the taxes on the additional $10 million in property value go back to the neighborhood.

Tampa uses tax-increment financing in eight neighborhoods, said Michael Chen, Tampa's development services director. In the downtown, for example, the technique brings in more than $15 million a year, most of which goes to paying off the bonds on the Tampa Convention Center, he said.

This type of financing presents opportunities - and potential headaches - with today's depressed real estate. Property values are so low they could rebound significantly when the economy improves, and that could generate more money for a ballpark if it were placed in a neighborhood eligible for the tax-increment technique.

If a new ballpark spurs new shops and restaurants in the neighborhood, it could add millions more a year in tax revenue.

To qualify for the tax-increment technique, the area would have to be considered "blighted" by a city, said Jeff Spies, St. Petersburg's finance director. Meanwhile, politicians might wince at using this type of financing in a time of depressed real estate, said Chen, the Tampa development official, who was speaking loosely about tax-increment financing and not specifically about using it for a stadium.

City and county governments may feel they're in no position to let go of any tax money.

In Hillsborough, declining property taxes means the county government is anticipating at least a 10 percent drop in revenue. Tampa has had to cut employees and consolidate city departments to get by.

Taxpayers likely would never approve a new stadium without the Rays also contributing. Two years ago, the Rays said they would put $150 million toward a new stadium in downtown St. Petersburg, although that ballpark idea died. The team might be expected to do the same for any new stadium.

If the team stays in St. Petersburg, the city might consider selling Tropicana Field to developers and allocating the money to a new stadium. It proposed doing so two years ago. In today's market, it's not clear how much money the 85 acres would fetch, but it's still attractive because of its size, said Will Conroy, a St. Petersburg real estate lawyer who worked on the ABC Coalition's finance committee.

"I think you'd have developers lined up, but not today," Conroy said.