Infrastructure support for Braves stadium will cost millions

As the concrete and steel of SunTrust Park rises in the Cobb County skyline, the amount of taxpayer funds that will be invested on the ground around the stadium is coming into sharper focus.

An Atlanta Journal-Constitution examination has found that the baseball stadium and mixed-use development will require tens of millions of additional taxpayer dollars for roads, bridges, public safety and foregone property taxes — expenses beyond the roughly $400 million for construction and maintenance.

In fact, road projects in Cumberland conceived since the stadium announcement will amount to more than $41 million. Those expenses — and others — will be paid by a combination of local, state and federal money.

And that is an incomplete total that does not include the $3.4 million for buses or $1.2 million annual operational expense for a new people-moving tram around the stadium area; and only allows $9 million for the bridge over I-285 for pedestrians and the tram.

The AJC has reported that construction of the bridge alone could exceed $9 million, and has identified additional expenses with that project not included in the estimate — $3.5 million to reinforce a parking deck, an estimated $2 million for land purchases, and $1 million that has already been spent for design and engineering. The bridge project is currently on hold for further study.

When asked if there could be more infrastructure costs associated with the stadium between now and its opening in April 2017, Cobb Commission Chairman Tim Lee responded: “Do you anticipate more rain in April than we have had in November?”

There could easily be additional projects, some with big price tags.

For example, it is still unclear how the county’s $14 million commitment of special purpose sales tax revenue will be used. That money is in addition to the county’s funding for construction and is dedicated to infrastructure projects around SunTrust Park.

“To date, neither the infrastructure projects nor the funding sources have been … identified,” Cobb transportation director Faye DiMassimo said.

Then there is the $10 million in property taxes from the Cumberland Community Improvement District for infrastructure improvements. The Cumberland CID is a 6.5-square-mile business district that raises funds by taxing property owners there. The CID’s annual budget is about $5 million.

Tad Leithead, the CID’s chairman, said its contribution is being provided in annual $2.5 million installments directly to the Braves, and the team is not required to report back how the money is used. The district will make its second payment in December.

“Our requirement was that the funds be spent on purposes for which CID funds can be spent — essentially infrastructure … in public right of way and in keeping with our purposes,” Leithead said.

Unreported costs

Cobb isn’t alone in shelling out big money around a new stadium.

Harvard Professor Judith Grant Long’s 2013 book, “Public/Private Partnerships for Major League Sports Facilities,” found that infrastructure, public safety, operations, foregone rent and other “unreported costs” have added an average $89 million in public cash to each of the 121 stadiums and arenas in use during the 2010 seasons.

That’s an extra $10 billion in related costs not typically associated with the country’s biggest stadium projects.

“Public partners pay far more to participate in the development of major league sports facilities than is commonly understood,” Long wrote in the book. “… The partnerships underlying these deals are in fact highly uneven, with the public paying an estimated 78 percent share of the costs.”

Leithead acknowledged that much of the investments made in the Cumberland area will benefit the Braves, but said “the infrastructure is there for use by everybody, every day.”

“By making a $1.2 billion investment in the community over a three-year period, which is just unprecedented, that has had the impact of drawing a lot of economic development and a lot of additional infrastructure investment,” Leithead said.

In addition to the $672 million SunTrust Park, the Braves are privately funding a $450 million mixed-use development called The Battery Atlanta.

Lee said the type of development originally zoned for the Braves site would have required similar, if not more, investments in infrastructure. But that assumes the entire site would have been sold and developed all at once.

“Infrastructure improvements associated with this development would have been required for any development on this site,” Lee wrote in an email.

The controversial $500 million bus rapid transit project is another example of additional spending that could happen because of the Braves.

One of the county’s contracts with the team requires it to use “best efforts” to secure funding for rapid transit, which would build new stations and a dedicated lane for buses down Cobb Parkway, past SunTrust Park and on to MARTA’s Arts Center Station.

The county would need a federal grant to cover about half the costs, and Lee has promised a ballot referendum before moving forward with the project. The county is currently awaiting the Federal Transit Administration to finish review of a report on rapid transit’s environmental impacts.

J.C. Bradbury, a sports economist at Kennesaw State University, said related stadium costs are difficult to count accurately because it involves projects that sometimes have been planned for years, but which take on greater priority when a stadium is built.

“But there’s no doubt that SunTrust Park is influencing the timing,” he said.

An example of that is the plan to build a $4.3 million firehouse in Cumberland. That project had been stalled since the Great Recession, but will now be constructed with 2016 special sales tax revenue.

“The station was planned since 2004 when we anticipated growth in the area, but due to the economic slowdown we held on to those plans,” Cobb Public Safety Director Sam Heaton said. “Now that we are seeing that growth, which does include the mixed-use around the stadium and additional offices and hotels, we need to add that station.”

Long counts foregone property tax revenue as a cost to municipal governments that help build stadiums. In Cobb, the stadium would generate about $7.9 million in annual taxes if it were not owned by the government, which is common in stadium deals.

John Vrooman, a sports economist at Vanderbilt University, said it’s fair to count foregone property taxes as a cost.

“The total amount of tax liability in a local economy is constant and so the tax exemption for one firm results in the zero-sum increased tax liability for someone else,” Vrooman said.

But Derek Schiller, the Braves executive vice president for sales and marketing, said the development has already paid off for the community with increased property values and about $500 million in planned development.

Leithead, of the Cumberland CID, agreed and said the team’s mixed-use development will generate millions in revenue for the county and school district, because the Braves have not requested a standard 10-year tax abatement for which they would surely qualify.

“There’s a payback,” Leithead said.

Lee recently sent out a newsletter claiming that the county would receive a 60-percent return on its stadium investment. But that calculation only looks at the annual expense of $6.3 million in county-wide property taxes, and ignores the additional $10 million a year in public money that will go toward paying off the debt.

Likewise, the county’s calculated return does not include the $24 million in cash for infrastructure around the stadium that was part of the deal.

When asked why he is claiming a big return on only a fraction of the county’s annual contribution, Lee called the question “ridiculous.”

“Your line of questioning continues to make it clear to leaders all over the metro region that you — and perhaps the AJC — have a blatant bias against everything Cobb County accomplishes,” Lee wrote in an email. “It is hard to continue to take your questions seriously.”

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