New Plan Put Forward To Finance Ballpark For the Detroit Tigers
CHICAGO -- A Wayne County, Mich., commissioner is promoting an alternative financing plan for a new Detroit Tigers baseball stadium that would use revenues from long-term ticket sales to back a $200 million tax-exempt bond issue for the facility.
A key element of Commissioner David P. Cavanagh's plan would be obtaining congressional approval to use tax-exempt bonds for the project. The Tax Reform Act of 1986 ended tax-exempt financing for sports facilities, although several communities were given transition rules that expired Dec. 31 to complete their projects. Mr. Cavangh said his plan would rely on getting the Detroit area's "influential leaders" in Congress to pass legislation that would allow the use of tax-exempt bonds.
The city would need a so-called rifle shot, or one-time provision, exempting it from the prohibition on the use of tax-exempt bonds to build stadiums - a provision that has proven virtually impossible to obtain over the last four years. The two tax committees have rejected such provisions to prevent what they believed could turn into a major drain on the Treasury if others asked for and got the same treatment.
Mr. Cavanagh, however, has said that while he just recently started approaching Detroit's delegation, he believed his plan had "a great opportunity to succeed."
Mr. Cavanagh's plan, which he said he has discussed with public finance people whom he chose not to name, would raise $332 million through the sale of 15,000 box, reserved, grandstand, and bleacher seats in a time-share arrangement that would span 20 years. He explained that each season's approximately 82 home games would be split into thirds - meaning each seat could be sold three times. The remaining seats in the 45,000-seat stadium would be sold normally. He added that his plan did not include revenues that the facility could realize from the sale of luxury boxes.
While he said he had not yet finalized the plan, he may be ready as soon as this week to officially introduce his proposal to the Wayne County Board of Commissioners. In the meantime, Mr. Cavanagh said he was attempting to "informally" present it to the Tigers organization, Wayne County and Detroit officials, and business leaders.
Mike Duggan, the county's deputy executive who worked on a joint Wayne County/Detroit plan that was submitted to the Tigers in August, did not return phone calls. However, Mr. Duggan was quoted by The Detroit News as saying that the use of prepaid season ticket programs "...is not a good way to raise money, and wouldn't come near what you would need for annual debt service." A spokesman for Mayor Coleman Young of Detroit also did not return phone calls.
The preliminary joint plan would have a city/county stadium authority issue $150 million to $200 million of bonds. However, that plan did not disclose many details on how the facility would be financed, saying only that the bonds would be repaid through rental payments by the county and the Tigers to the authority. The county would fund its payments through countywide taxes, while the Tigers would use stadium, parking, or unspecified "other revenue sources," according to the preliminary plan.
County officials have linked a 1971 state law, which gave the county the ability to levy a 5%, 25-year hotel-motel tax, to the financing of the Tiger stadium project.
A request for qualifications sent out by the county executive's office to potential senior managing underwriters in June outlined a plan that would have county revenues back a tax-exempt bond issue and team revenues back a taxable issue.
However, neither the preliminary plan nor the request for qualifications gave any hint as to how the county could issue tax-exempt bonds.
Wayne Workman, a senior vice president at Tucker Anthony Inc., the county's financial adviser, had said the selection of a senior underwriter for the deal could possibly take place in August, but one source close to the financing said the selection process has been delayed until the city and county could get their stadium authority organized.
Tigers officials, meanwhile, have not commented on the financing aspect of any plan.
