Is It Worth It? The Debate Over a Soccer Stadium Continues

Soccer Stadium
rendering of a potential soccer stadium at McKalla Place

Is it worth it? That’s the question on everyone’s mind lately as City Council continues to debate the future of a professional soccer team in Austin.

A lot of this debate has focused on the “deal” that the City of Austin might strike with the owners of the Columbus Crew soccer team (which wants to relocate to Austin if a stadium deal can be struck). In June, the soccer team owners unveiled their own proposal for building a soccer stadium on the city-owned plot of land called McKalla Place, located near the Domain.

That proposal suggested that the soccer team owners (Precourt Sports Ventures) would build a $200 million stadium with private financing, but that the city would retain ownership of the land and lease it back to the soccer team for $1 a year. This would also mean that the team would pay no property taxes on the land.

Several City Council members immediately took issue with that proposal, saying that it did not provide enough public benefit back to people of Austin.

So, at their last meeting in June, City Council decided to do two things:

  • Direct the City Manager to engage in negotiations with the soccer teams to try and come up with a better stadium deal
  • Allow other (non soccer related) developers to submit ideas to the city about what they would like to do with the McKalla Place piece of property instead

Earlier this week, city staff returned from negotiations with the soccer team owners and presented City Council with a stadium deal 2.0, so to speak.

Here’s what’s in that proposed deal:

  • Soccer team owners will still build the entire stadium with private money (no public funding for stadium construction)
  • Starting in year six of the lease, the soccer team owners will pay the City of Austin $550,000 a year for rent. This ends up being $8.25 million over the course of the 20 year lease.
  • In order to help fund repairs, the soccer team owners will deposit $125,000 a year into a Capital Repairs Reserve Fund, starting in year six of their lease. In year six and year seven, the City of Austin will deposit 437,500 a year into that fund. Starting in year eight, the City will deposit 125,000 a year.
  • Soccer team owners will provide the space for 130 affordable housing units to be built at McKalla Place. While they will not be responsible for actually building or funding those units, they have already pledged to donate $4.8 million to Foundation Communities.
  • Soccer stadium will be built to Silver LEED Standard or Austin Energy Green Building 2-Star Standard
  • Soccer stadium will include 8 acres of “green space, open space and performance areas that will be accessible to the general public year-round during non-event times.”

Remaining Questions

At a special called meeting on Wednesday, Council members had a lot of questions about the negotiations. However, one of the biggest open-ended questions seemed to revolve around transportation.

There has been a lot of conversation around the desire to move Capital Metro’s MetroRail station at Kramer Lane to McKalla Place if a stadium ends up getting built. The big issue is that as of yet, it doesn’t seem clear who would pay for that. In the soccer stadium negotiation term sheet released by the city, the soccer team owners are not responsible for moving the train station (a cost which has been estimated at around $13 million).

On the City Council message board this week, Council Member Delia Garza suggested raising the money for a new train station (or perhaps just greatly increased bus services) with a combination of direct payment from the soccer team to Cap Metro, a portion of the soccer team’s rents being dedicated back to Cap Metro, and a $1 surcharge on all soccer tickets to be sent back to Cap Metro/City of Austin.

So what comes next?

City Council could vote on the soccer stadium deal as early as August 9th. (It’s Item 19 on the City Council agenda and public comment will be accepted if you’d like to sign up to speak. The main question that Council will be asking the public is – do you like the terms of the new soccer stadium deal? Do you feel like it presents enough public benefit?)

On her Facebook page, Council Member Leslie Pool (whose district includes McKalla Place) wrote that the new soccer stadium deal “is still a massive giveaway to an out-of-town corporation. The negotiated term sheet is insufficient and disappointing, as seen in the many hard-hitting questions from across the council dais.”

As the Austin Chronicle reports, Pool intends to put a measure on the August 9th City Council agenda calling for a vote to put the soccer stadium deal on the ballot in November.

Update – Since this story was originally published, Council members Leslie Pool (District 7), Ora Houston (District 1), Alison Alter (District 10), and Ellen Troxclair (District 8) posted an amendment package to the stadium 2.0 deal. The document runs through all of their concerns about the deal that’s currently on the table and provides suggestions that they would like to see implemented into any finalized agreement with the Columbus Crew soccer team. 

Here’s a snapshot of what’s in the amendment package:

  • Require the soccer team owners to pay a rent of $958,720, escalating at a rate of 2 percent annually (as opposed to the $550,000 a year for rent in the current proposal)
  • Require the soccer team owners to make some contributions to property taxes for Travis County, Austin Independent School District, Central Health, and Austin Community College, but at a discounted rate of $958,720 in the first year, escalating at a rate of 2 percent (as opposed to no property tax contribution in the current proposal)
  • No longer require the City of Austin to cover capital repair costs for the stadium (as opposed to the $2.5 million over 20 years in the current proposal)
  • A more clear accounting of all the city subsidies (costs and foregone revenues) being offered to the soccer team owners before any final deal is reached
  • Clearer penalties to prevent the soccer team from relocating
  • A $3 surcharge fee on all tickets to go back to mobility improvements, the city’s Housing Trust Fund, and the city’s general budget
  • Allowing the Austin Parks and Recreation Department to participate in the design of the 8 acres of open space at the stadium site, in order to ensure that it is truly open to the public
  • Require the soccer team owners to fund a new train station at McKalla Place
  • Require at least a Three-Star Austin Energy Green Building Rating (as opposed to the Two-Star Rating minimum in the current proposal)

Of course, at this point, it’s not clear which of these amendments the soccer team owners would agree to. As the City of Austin Deputy Chief Financial Officer Greg Canally said of the process in getting to the current proposal that’s on the table, “It was a negotiation. We didn’t get to sit down and dictate every piece of it. It was truly a negotiation.”

 

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