The Arizona Diamondbacks could fund hundreds of millions of dollars in renovations to Chase Field, and potentially add a hotel and other amenities in the area as well, by imposing a new sales tax on tickets as part of a proposal by the Legislature and nearby governor Doug Ducey’s desk.
Proponents of the plan hail it as a way to make necessary improvements to Chase Field without seeking direct tax funding. A theme park district created by Maricopa County and the City of Phoenix would be eligible to issue bonds to pay for sports, entertainment, and other recreational facilities. The bonds would be covered and repaid by income from a new 9% tax on the sale of tickets, goods, food and beverages at the stadium.
House bill 2835 would allow the Diamondbacks to add what the team says to make much-needed repairs to the 23-year-old Chase Field, which is tax-paid and county-owned, and possible other amenities in the area around the ballpark. The Diamondbacks would have to pay 20 percent of the renovation amount. The team’s current plan is for the team to raise $ 100 million and issue bonds worth $ 400 million.
Using the theme park district to fund stadium renovations would also ensure the team doesn’t move to another city – the team spoke to Las Vegas officials about a possible move in 2019 – or even moving out of downtown Phoenix. The plan would tie the team to Chase Field until the 30-year bonds are paid off.
Derrick Hall, the chief executive officer of the Diamondbacks, said the team will likely reduce the capacity of its ballpark if it uses the theme park district to fund improvements. Chase Field’s capacity is 48,519, and Hall said the ideal number that most new stadiums are aiming for is between 38,000 and 42,000. While reducing overall capacity, the team would add new clubs and suites, including at the field level.
Further improvements could be funded just outside the ballpark.
Nick Wood, an attorney representing the Diamondbacks who drafted the proposal on behalf of the team, told lawmakers that a hotel would likely be on either the corner of 7th Street and Jefferson Street on Chase Field Plaza, which is right next to it the building is connected. Hall said the team could also add restaurants, retail stores and office space to the area, though this could also be fully funded through private partnerships.
“It just gives us the option to stay downtown and stay at Chase Field. The building is in need of renovation and we were wondering if we could possibly remodel it, ”Hall said across from the building Arizona mirror. “This gives us the opportunity to really get by without taxpayers’ money and to more or less tax ourselves and service the debt in a very creative way.”
The city, county and state will not be hooked if the new sales tax revenue is insufficient to repay the bonds and only the team itself is liable, said MP Regina Cobb, who sponsored the legislation.
“(Become a believer) to be able to return to the D-Backs. You are the bondholders. So this is who’s on the hook, ”Cobb, a Republican from Kingman, told the mirror.
While the team could add a 9% surcharge to tickets and other items themselves and use that money to get into the bond market on their own, Wood told lawmakers that the high interest rates and short-term repayment schedule it would likely face would make this option impractical . A tie through the theme park district would offer much better terms and lower interest rates, making it a viable option.
Wood differentiated the proposed sales tax to fund the bonds with other types of tax financing, such as the 0.25% increase in the county sales tax rate introduced in 1994 to fund the ballpark.
“The fans have a choice. You have the choice of either coming to the game and paying the ticket price with the additional usage fee, or you can watch it on TV, ”he told the Senate Finance Committee on March 24th. “
While the City of Phoenix supports the legislation, Maricopa County, which has fought with the team for years to require upgrades and repairs, has remained silent on the matter. The Diamondbacks went to court in 2018 Attempt to force the county to pay for $ 187 million worth of improvements to Chase Field. Under a The two sides reached agreement the following yearThe Diamondbacks agreed to drop the lawsuit, and the county agreed to let the team look for a new home immediately, several years before their previous agreement would have allowed a move.
Supervisor Steve Chucri, who helped broker the 2019 contract, said he supported the legislation. It would keep the team at Chase Field the way the public wants, he said, and avoid more litigation and fighting between the team and the county.
“What I like about it is that… this is very entrepreneurial and it allows the Diamondbacks to be entrepreneurial, not necessarily using taxpayer money, and trying to use this as a tool to find out what’s best, what’s next best Step for them is in terms of a facility for their use, ”said Chucri.
HB2835 would amend an existing theme park district law to include sports facilities. The original law was passed in 2005 Funding for a proposed theme park planned for the city of Williams, but the plan never came to fruition. Under this law, no bonds have ever been issued by a theme park district.
The proposal found broad support in the legislature and was passed 57: 2 in the House of Representatives and 23: 7 in the Senate. Due to a change in the Senate, HB2835 must return to the House for a new vote before it goes to Ducey.
However, some lawmakers still have concerns. In the Senate Finance Committee, the bill was only just passed by 5 to 4 votes, as legislators on both sides of the aisle expressed concerns.
Some lawmakers found the proposal to fund tax increases too similar for their tastes. Under a traditional TIF, as it is often called, a government agency funds infrastructure and other projects by tying itself to future property tax revenues that it is expected to generate.
“I have to tell you Nick, it looks like a TIF and it swims like a TIF. We just changed the name a little, ”said Senator Vince Leach, R-Tucson, Wood during the Senate Finance Committee hearing.
Leach said he also had questions about the state’s power to essentially delegate the tax authority to a private body.
Senator Michelle Ugenti-Rita, R-Scottsdale, was dismayed at the suggestion that the HB2835 would allow the Diamondbacks to fund stadium improvements without taxpayers’ money.
“Aren’t fans taxpayers?” She asked.
And Senator Juan Mendez, D-Tempe, asked why the team didn’t plan ahead of the kind of improvements they’d like to make.
“Was it your opinion that you could always come to us to help you?” Asked Mendez. “Did the problem just happen? Didn’t we know this was going to be a problem? “
Wood stressed that the new tax would be collected by the theme park district, not the team. The Diamondbacks organization would take their plan and application to the district for approval, and the bond insurers would review the plan for financial viability. Wood said it was a huge challenge, which is why no one has ever been able to take advantage of the theme park’s district law. However, the team has financial data on 22 years of sales of tickets and other merchandise that would demonstrate its ability to repay the bonds, he said.
The district would consist of a member of the governing body of the city and county that established the district – in the case of Chase Field, the Phoenix City Council and the Maricopa County Board of Directors – and a Maricopa County-appointed Senate President and Residents Apache, Coconino, Mohave, Navajo, or Yavapai counties, appointed by the House Speaker.
Proponents also pushed back on the notion that HB2835 was a TIF. Cobb stressed that there are no property taxes, while Wood told the Senate Finance Committee that the team would essentially be self-taxing.
The ability to apply the revised themed district law would not be limited to just the Diamondbacks. Any city with at least 1 million people – Phoenix is the only city in Arizona to meet this threshold – or any county with at least 125,000 people could create a theme park district. All districts created under the law could cumulatively issue bonds worth up to $ 2 billion.