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Cobb reckons with Braves stadium debt during pandemic

FILE PHOTO: The Battery was empty hours before the Braves would’ve been preparing for their home opener against the Marlins on April 3. (Gabe Burns / AJC)
FILE PHOTO: The Battery was empty hours before the Braves would’ve been preparing for their home opener against the Marlins on April 3. (Gabe Burns / AJC)

For the first time in more than 150 years, spring has come and gone in America without professional baseball.

Cobb County’s own Truist Park — the home of the Atlanta Braves, built just three years ago with more than $400 million in public subsidies — is among the countless venues across the country that has remained closed to the public due to the COVID-19 pandemic.

Just this week, the league announced a plan to salvage a little more than one-third of the season, meaning just 30 regular-season home games for the Braves. But it’s unknown if fans will be allowed back in the stands. And if they are, social distancing requirements will severely limit their numbers.

That’s bad news for Cobb taxpayers, who are still on the hook for $16 million a year in debt service and capital maintenance for the stadium.

Architects of the deal that brought the team to Cobb predicted an immediate financial windfall that has yet to materialize, although the county's general fund subsidy has shrunk since the ballpark opened in 2017.

The money Cobb pays for the stadium comes from a combination of property taxes and tourism dollars, and the latter has already taken a huge hit.

Meanwhile, local governments across the country are suffering from the sputtering economy and bracing for a deeper economic crisis.

County officials say they plan to cover the lost tourism revenue using additional property taxes from the Cumberland Special Services District, a commercial tax that only applies to the area around the stadium and was created to fund it. This would allow Cobb to avoid increasing the debt burden to the general fund, which depends on property taxes from residents countywide.

J.C. Bradbury, a sports economist at Kennesaw State University and an outspoken critic of the Braves deal, sees little difference.

“There’s no found money in government,” Bradbury said of the county’s plan. “It’s all taxpayer money, so when you start saying it’s coming out of this bucket and not that bucket, you’re not making money, you’re just shifting money around.”

Cobb Commission Chairman Mike Boyce, who ousted his predecessor in 2016 largely by appealing to popular anger over the Braves stadium deal, said the county must meet its financial obligations.

“I’m never going to say it’s not money out of the taxpayers’ wallet,” Boyce said. “My point of view, though, is are we doing the responsible things with those taxes that best reflect the fiduciary duty we have to the taxpayers? … Can we openly show what we’re doing and why we’re doing it?”

Boyce said he feels confident the county is acting responsibly.

He said the county fully expects to pay its stadium bills without raising the tax rate again or dipping into its unassigned fund balance, which he said has increased to more than $150 million under his leadership. The chairman successfully spearheaded a tax increase in 2018, in part, he said, to shore up that fund balance and make the county more resilient to economic downturns.

In the past, some Cumberland property owners have complained about the special district tax to support the Braves stadium. But others don't seem to mind the county's plan to use those taxes to make up for lost tourism revenue.

“I actually think that would be more fair than making everybody countywide pay,” said Fred Beloin, an attorney and planning commissioner who owns office space near the stadium, and paid about $2,500 in Cumberland Special Services District taxes last year. “The people who are directly adjacent to it do get some benefit.”

So far, county officials say there is enough money in the special services district fund to cover the losses. If the recession lasts too long, however, they say the county will have to find another solution.

By the numbers

In 2019, the county spent about $25 million on the ballpark, mostly on debt service, according to the finance department.

Of that, the Braves contributed $6.1 million in direct cash payment and another $2.4 million in property taxes.

The remaining $16.3 million was paid by the county from the Cumberland commercial property taxes ($5.9 million); the county general fund ($4.2 million); countywide hotel-motel taxes ($3 million); a $3-per-night Cumberland hotel room fee ($2.2 million); a rental car tax ($870,000); the county’s casualty & liability fund ($71,000).

Taken together, money from tourism, including car rental and hotel taxes, paid about a quarter of the county’s stadium costs.

Since that time, the pandemic has hit tourism hard.

Countywide hotel-motel tax revenue dropped more than 50 percent in March and April compared to the same time last year. Hotel-motel tax data is among the earliest available indicators of a broader economic crisis expected to affect local governments, but the full picture won't emerge until later this year or next.

One recent report by the National Association of Counties estimates an overall $144 billion budgetary hit across all U.S. counties.

The drop in tourism taxes isn’t due solely to the ballpark’s closure — travel is down everywhere — but the county depends on that money to help pay for the stadium.

It is also losing out on sales tax from food, drink and merchandise sold in and around the stadium on game days, although the true impact of that is hard to measure. The Cumberland area is home to many large businesses, convention spaces, a mall and a performing arts center, all of which generate significant commerce in a normal year.

Sales tax is collected by the state and redistributed to counties on a monthly basis, but is not broken down by region or venue. So far this year, countywide SPLOST collection has largely held steady, and has not fallen below projections.

According to figures provided by the Braves, the team’s mixed-use development known as The Battery contributed $4.5 million to the county last year in sales, liquor and hotel taxes and fees. The county used some of that to pay stadium debt.

The Braves did not respond to a list of specific questions, including whether they had offered any discounts on rent to businesses in The Battery that depend on game day traffic.

“Like most businesses around the country and the world, the Atlanta Braves have been impacted by the COVID-19 pandemic,” the team said in a statement. “Our business will manage through this unprecedented situation and we continue to have an excellent relationship with Cobb County.”

Hector Santiago, the chef and proprietor behind El Super Pan sandwich shop in the Battery, said he could not disclose his financial arrangements with the Braves. The shop has been closed since March, and Santiago said he’s looking forward to reopening in mid-July and hoping to make up some of his losses, whether or not fans are allowed back in the stadium.

“It had really put a hurt on us,” he said of the pandemic. “Not having the games definitely affects traffic.”