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County commissioners eye legal options on city’s soccer stadium deal

Wednesday, August 22, 2018 by Chad Swiatecki

Travis County commissioners voted Tuesday to preserve their option to challenge the city of Austin’s deal to make a piece of North Austin land tax-exempt to facilitate the construction of a professional soccer stadium.

The unanimous decision came in the wake of City Council’s 7-4 vote last week to enter into a lease with Precourt Sports Ventures on the 24-acre parcel known as McKalla Place, with one of the key terms of the deal being that the business interest will pay no property taxes on the stadium that is expected to cost at least $200 million.

The deal will see Precourt Sports Ventures – operating as Stadium Co. – financing the stadium with money from JPMorgan, then giving the structure to the city and agreeing to pay $8.25 million in total rent to the city over the 20-year lease. That deal structure removes all property tax burden for the owners of the Columbus Crew SC team that is expected to move to Austin, with Travis County, Central Health and other taxing entities missing out on tax revenues estimated to total several million dollars each.

County Judge Sarah Eckhardt said the city’s decision impacts service providers throughout the county who were not widely consulted on the deal.

The commissioners also unanimously voted to pursue negotiations with the city and other taxing entities to discuss expectations for preserving taxable value in the redevelopment of publicly owned real estate.

“We do have a fiduciary duty to ensure the burden of taxes is falling equitably among Travis County residents, whether they are individuals or corporations. And we also have an obligation to ensure the appropriate funding for the services that we provide, which the demand for those services increase with the arrival of major league sporting events of any stripe,” Eckhardt said. “I believe we will get no property tax benefit from this venture based on the current term sheet.”

Austin Mayor Steve Adler and other Council members had argued that the long-vacant parcel would most likely have been developed with affordable housing, which would have yielded little or no property tax revenue for the county or other groups as well.

That assertion was questioned several times during discussion on the deal for the 20,000-seat soccer stadium that is expected to open in 2021.

Developers John Chen and Marcus Whitfield, who submitted one of a half-dozen alternate development proposals for the site that were ultimately not considered by the city, said their proposal would have brought office and retail use along with 900 affordable housing units to the site, generating millions of dollars in tax revenue in the process.

Chen read forecasts that in the first year after completed development Travis County would’ve received $847,000 in taxes, Central Health would’ve received $247,000 and Austin Independent School District would have taken in $2.73 million.

“This needs to go down in the books as not the way to do business,” said Whitfield.

After executive session the commissioners didn’t tip their hand as far as their intent to legally challenge the city on its deal for the stadium, but Commissioner Gerald Daugherty said there should have been more discussion between the two bodies.

“I’m pretty amazed. I would hope if this thing is as consequential to the taxpayer as I think a lot of people think it will be, people should take that into consideration when people are running for office,” he said in a nod to the coming election of five City Council seats and mayoral race. “I would think we’re gonna find out how much the public is concerned about this. They own the land and probably had the legal right to make that call – but to do it without consideration to your other taxing jurisdictions, I think was pretty inconsiderate.”

Rendering of the proposed soccer stadium courtesy of Gensler, TBG and CAA ICON.

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