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Council seeks clarity – and more money – in soccer negotiations

Thursday, August 2, 2018 by Chad Swiatecki

Wednesday’s City Council meeting dedicated to the ongoing push that could bring Austin a professional soccer team frequently resembled a public bargaining session, with Council members pushing staff and hired legal counsel to extract more concessions and precise terms and conditions in any legal agreements.

The biggest monetary ask on Wednesday came in the morning session when Council Member Delia Garza reviewed her new proposal that would ask Precourt Sports Ventures – owners of the Columbus Crew team that may relocate to Austin – to contribute $3 million and a $1 transit fee on each game ticket to the Capital Metropolitan Transportation Authority to pay for construction of a rail station next to the McKalla Place property that is owned by the city.

Council’s discussion covered everything from asking for a list of the city’s costs of risks and liabilities in the proposed agreement, to questions about how the city and PSV split responsibility for traffic impacts and safety costs on game days, how the affordable housing complex Council pushed for on the property will be realized, and what specific community benefits will be included in the final stadium agreements that will largely be finalized between the two sides in private.

A presentation led by city Chief Financial Officer Greg Canally and Frank Jones, a partner with the Greenberg Traurig consulting firm that helped the city negotiate the term sheet, pointed out that the $200 million stadium is one of only three recent Major League Soccer stadiums with no public financing.

Pushing back against the statement that the team’s annualized rent of $412,500 – or $550,000 for the final 15 years of the 20-year lease – would be one of the higher rents in the league, Council Member Leslie Pool suggested that the team should also contribute more annually toward a capital improvements fund to cover repair costs at the stadium, which will be given to the city in a move to absolve the team of property tax payments.

Jones answered by pointing out that the five-year rent break was given as a trade-off during negotiations for PSV assuming responsibility for costs to prepare the site for construction.

“The reason they are not paying rent for years one through five is a recognition that they do have all the responsibility for all of the site preparation,” he said. “In the original proposal, the city was supposed to give them a clean and construction-ready site at the city’s cost. The city refused to do that, so in recognition of (PSV) taking on those costs they did get some relief on the first five years of rent.”

Wednesday’s session likely leaves two more Council meetings before the team’s deadline of Aug. 9 to secure an approval from Council to move forward with final agreements based on the term sheet. It is unclear how much room for further brokering there is for requests such as Garza’s, but PSV representatives in attendance said the current term sheet likely represents a close-to-final position.

Council Member Ann Kitchen pushed Jones on the city’s responsibilities and legal options if one side opts to exercise a clause to terminate the agreements, zeroing in on language concerning the property tax liabilities to non-city entities. Kitchen said uncertainty and vague language throughout the term sheet make it hard for her to confidently vote to move forward.

“This is only one of the items where there are still significant terms to be negotiated, as one would expect at this stage of negotiation of a term sheet,” she said. “That causes grave concern to me, to be asked to vote, to then negotiate and execute, when there are still significant terms that are both policy concerns and terms that impact the liabilities and costs and risks to the city.”

Council Member Ora Houston pointed out that the team’s ongoing legal case in Ohio that could possibly threaten the move adds a cloud of uncertainty to next Thursday’s expected vote.

“My concern is, what happens in Columbus if the judge rules and the team is forced to stay there?” she said. “We’re going to be making a decision on the ninth, and the consequences of those decisions won’t be available on that until later. As many of you know, I’ve been married a couple of times, and taking this vote on the ninth before that decision is made is like getting married before the divorce is final.”

Photo by Matthew Bernhardt made available through a Creative Commons license.

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