Sandy stadium deal not so hot?

(by Leigh Dethman desnews.com 2-27-06)

Maybe the deal wasn't so sweet after all.

Salt Lake County won't be getting the payout Real Salt Lake promised in a press release forwarded last week to local media.

Instead, financing documents show the county's yearly share of the local hotel tax increment to pay for a stadium is substantially less than the soccer team's rosy predictions.

"There are some complicated financials that we are working out with the county, and that earlier press release is not what we're going to end up with," team spokesman Josh Ewing said Monday. "In the fast-moving world of today, that press release about the proposal is probably just no longer the working ideas."

Real promised the county would receive 35 percent of all hotel tax increment in the county from 2016-2023, but it will only pocket 25 percent on average during that time. Then in the next 13 years when the county was promised 50 percent, they will only average 43 percent.

Jason Burningham, the team's principal and owner, said the county was never supposed to receive a full 50 percent of hotel tax increment. Instead, the county's share would even out to 35 percent over the life of the bond — roughly $62 million.

Never mind the fact the original press release said the tax increment would be split 50/50 from 2024 until 2036, he said. That should not have been a factor in selling the funding plan to the public. "I'm not sure those who made the press release understood how the numbers work," Burningham said.

Either way, the proposal is already moot, Burningham said.

"It's the only proposal on the table, but everyone's concluded it's not going to work," he said.

Team officials met Monday to talk about a new stadium funding plan that would offer the county "significantly more" money for other tourism projects, Ewing said. The county had several issues with the initial funding plan and is in the process of "re-working the deal," said Doug Willmore, the county's chief administrative officer.

The $41 million public funding plan for the Sandy stadium is in constant negotiations, Willmore said. Real Salt Lake is pushing the county to agree to pitching in $45 million in public funding, but county officials maintain $41 million is as high as they will go, Burningham said. Real Salt Lake plans to break ground on the 22-acre soccer stadium in Sandy this fall, but insists the $145 million project can only be built through a public-private partnership.

The whole plan hinges on HB371, which would allow all counties in the state to levy a 1.25 percent tax on hotel accommodations for tourism projects. The county is the only current municipality allowed to collect hotel tax increment, which is now used to pay for Salt Palace expansion and for a parking lot Real Salt Lake wants to share with the busy South Towne Expo Center.

Concrete financial plans for the stadium won't be ready until team, county and Sandy officials see the final tax increment numbers allotted by the Legislature if and when the bill passes.

County officials said they were "thrown for a loop" last week after Real Salt Lake sent out a press release detailing public funding plans for the stadium.

They say Real Salt Lake's promise that the county's triple-A bond rating will be protected is not a lock. That assumption was made by a firm hired by Real, not an independent, non-biased bond expert, said Darrin Casper, the county's chief financial officer.

The county follows strict protocols to maintain the triple-A bond rating. One is to keep bonds within a 10-15 year term, said Lance Brown of the county auditor's office. Real is asking for a 20-year bond.

County officials also want to pay off the bond as quickly as possibly by paying interest and principal from the beginning. But under Real's proposed funding, the county will pay $13 million in interest up until 2018, when the county will start paying for the actual bond. It would be like making interest-only payments on a house, which would ultimately cost the county millions in interest before the bond principal is due.

The county will have to find the money to pay principal on the loan from year one, county auditor Sean Thomas said.

"The concept of paying interest only upfront is what we don't like," Thomas said. "We don't want to set a precedent doing a strange financing deal because we want to hold strong to our principles."

The county has only been involved in stadium-financing talks roughly since the beginning of the Legislature and is still analyzing data to determine what funding options would be fiscally sound, Casper said.

The funding negotiation process will likely hit a lot of hurdles in the process, but the county is willing to work with Real Salt Lake to build it a permanent home in Sandy.

"The county is not necessarily against this project," Casper said. "The county hasn't made a decision, and we're still analyzing it. It may well be fair — that's to be determined."