Tuesday, December 19, 2017

Sarasota County's Multi-Million Dollar Timing Hiccup with the Braves

With the U.S. House attempting to finally eliminate the federal subsidy of bonds used to finance stadium construction, Sarasota County bit the bullet and took out $21.6 million in bonds to help pay for the Braves' new 8-week-a-year home in North Port.  The bonds were sold on Dec. 13 at a 3.7% rate.

Unfortunately for Sarasota taxpayers, the Senate erased the proposal from the federal tax plan two days later, meaning the county failed to take advantage of the subsidized rate that sports owners - and the governments that support them - typically enjoy when financing stadium construction.

But a county spokesperson told me Sarasota had no choice but to take out the taxable debt due to "uncertainties" related to the tax cut bill, including the possibility of the stadium subsidy elimination going into effect retroactively, from the date the legislation was first introduced, Nov. 2.  The county had to meet a closing date on the deal of Dec. 21.

In essence, that means instead of having all Americans subsidize their stadium debt, Sarasota County will fund its portion of the debt all themselves.  And that bad timing likely will cost taxpayers of Sarasota County several million dollars, as the difference in financing charges on tax-exempt bonds and taxable bonds is substantial.

That said, there's good news to the North for Rays fans, as the tax exemption basically remains in place for all future U.S. stadiums (note: Montreal is not in the U.S.), and it won't cost Hillsborough or Pinellas quite as much should they decide to try and bust their budgets to make a new stadium work.

But, before I go, some final irony:

In the same editorial the Tampa Bay Times criticized Congress' new tax plan as raising debt and primarily benefitting "businesses and the wealthy over the poor and middle class," the Times also applauds the abandonment of the tax-exempt bond reforms.  Which is kind of befuddling, since the tax exemptions for investment profits related to pro stadiums is another handout that benefits the rich, not the middle class.   Hmph.

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