Thursday’s Rays vote: $80 million in bonds the stadium’s property taxes can’t repay

Thursday’s agenda has 99 items. Item 90 is where the rubber meets the road on the Rays agreement, a resolution authorizing up to $80 million in “Non-Ad Valorem Revenue Bonds (Ballpark Project)” for the city’s contribution, and starting the court validation the agreement requires before the city pays anything. It’s one of the “many votes” I said were coming when council approved the funding agreement 4-3 in August.

The resolution “authorizes and approves” the $80 million in contribution payments and the ability to issue up to the full $80 million in bonds. A memo from Deputy CFO Mike Perry frames the vote as one that “simply is required to be adopted to initiate the Circuit Court validation proceeding” and says “Subsequent City Council approval would be required to issue any debt.” Council has heard “there will be another vote” before, on every project the budget proposes to fund with debt. The second vote only sets the terms, and by the time it arrives the contract is signed and the choice is bond or find the cash. The plan presented to council in August was to borrow short term and roll it into long-term debt later, and the resolution is built for that: the bonds may be issued “in one or more series and at different times,” with a maturity of up to 30 years on each.

What’s interesting is that the final language of the signed agreement differs in minor ways from both the version of the agreement that was provided to council the afternoon before the vote via OnBase and the version that was provided to Tampa Monitor when a request was made for the version council approved. Which I missed in the fine print of the resolution council approved which approves the agreement “in its entirety or in a form substantially similar thereto”. Substantially similar clearly being the defense for any differences. The agreement does suggest that the $80 million contribution plus interest would be “repaid” from the “increment share” of the development. The city’s taxes they get to keep. However, the item before council Thursday is for Non-Ad Valorem Revenue Bonds. Which means the bonds themselves can not be paid back using ad valorem funds — property taxes. The incremental funding from the Rays stadium development is property taxes.

So while you could argue it’s just a matter of accounting, what’s not up for debate is that borrowing the full $80 million would cost roughly $140 million with 30 years of interest at 4.1 percent — the rate St. Petersburg penciled in for its own Rays stadium bonds in 2024, a reminder that Tampa isn’t the first city to run this exercise — and the city is the one obligated to pay it back. There’s no guarantee or obligation from the Rays or the stadium district to cover that. Just the wishful thinking of what kind of mixed-use development can be built to generate that kind of taxes over the next 30 years. Even in the Rays’ best “target” scenario, the city’s cut of the stadium district’s incremental taxes wouldn’t cover a single year’s debt service until 2045. The county’s “minimum” scenario doesn’t cover a full year’s payment until 2057, when the bonds start retiring. And the payments start in 2027. In the target scenario nothing is on the tax roll until 2031; in the county’s, 2034.

Over the full 30 years the target scenario produces about $140 million for the city — almost exactly what the debt costs, just not when the payments are due.

What the $80 million buys is spelled out too. The resolution says it is “to be used solely for Public Horizontal Capital Improvements,” and the agreement defines those as public improvements “that directly serve the Ballpark” on or next to the 21.5-acre ballpark parcel: streets, sidewalks, signals, plazas, utilities, stormwater, fiber, demolition and grading, and “surface parking areas, parking lots, parking structures, parking garages.” The city’s money goes into the ground under the ballpark. The property taxes that are supposed to pay it back come from the mixed-use acres around it, which don’t exist yet.

One more thing about the structure. Bonds can’t be obligated to property taxes beyond 12 months out without a voter referendum. That rule explains both halves of this funding agreement. The city obligates non-ad valorem funds. The CDD gets an interlocal agreement (in which the city and county promise only to budget the money each year, not to pledge their taxing power) that allows it to also issue bonds without a referendum. In the meantime, we don’t know what funds will be used to service the debt other than not property taxes. The resolution defines that as every revenue in the city’s general government funds except property taxes and stormwater fees, and it doesn’t carve out the Community Investment Tax. The agreement, for its part, says money in any of the city’s community redevelopment trust funds “will not be used to fund any portion of the City Contribution Amount” without a separate deal approved by the CRA board. So not property taxes, not CRA money, and nothing from the stadium district itself. Compare that to the spring’s MOU, where the Rays would have paid “rent” on the CRA’s $100 million bond until the development’s tax increment caught up. There is no rent in this agreement. Until the increment shows up, the gap is the city’s alone. Which brings it back to the CIT reserve: the Deputy CFO who signed the memo for this week’s agenda item told council on September 8 that if the city borrows for the Rays, his “first play” for the CIT reserve is the debt service. Nobody has said otherwise since.