This concludes our AJC Live360 session. Thanks very much for joining us.
The Braves have hired an architect and are scheduled to break ground in January.
Correction: In the Falcons deal, the budgeted amount by the GWCC budgeted $2.5 million and will be reimbursed up to that amount by the team. And I should have said it's unclear if Cobb County will have to pay for its legal and consulting services.
Cobb has hired four law firms to help with a range of legal issues related to the Braves stadium. The firms include Thompson Hine, which has done a number of pro sports stadium deals. Thus far, the legal bills total about $47,000. That is certain to climb. The question is will Cobb structure the deal and be able negotiate it so the Braves will help cover those costs.
The AJC had a story in this morning's paper about the legal bills associated with this project. What can you tell us about that?
Let's hear from Tim Tucker, who has been covering the OTHER big stadium story: the move of the Falcons. How were some of those unforeseen costs handled?
The Braves say they are making a huge financial commitment to the community, and that stadium construction and operations will create hundreds if not thousands of jobs, increase property values in the area, increase tourism and add sales tax revenue to both the county government and school system. Economic studies routinely find that the promise of economic impact is often overstated, and the AJC has reported perviously that the jobs being moved to Cobb for stadium operations are typically low-paying. But there is no doubt that people who were spending money going to Braves games in Fulton County will now be spending that cash in Cobb -- and that's good for the county's bottom line.
What will be the economic impact of the Braves' move in Cobb County?
The Braves and Cobb conducted all of their negotiations in secret between July and November. District commissioners were briefed on the deal in private, closed-door sessions with Braves officials, and business leaders, including those from the Cobb Chamber of Commerce and the Cumberland Community Improvement District, so that details of the plan wouldn't become known to the public. There was no public hearing on the matter (although district commissioners did hold individual town hall meetings to take questions), and there was also no referendum on the $300 million public investment before commissioners approved the deal. Those are seen as significant issues by some people in the community.
Dan, could you elaborate on the "lack of transparency from county officials" you mentioned just now?
Those groups appear to be mainly concerned about Cobb County officials' handling of the deal and not as much about the amount of money being invested. People who identify themselves with those types of organizaitons have talked extensively to me about what they perceive as a lack of transparency from county officials; the short amount of time between the deal being announced and approved; the lack of public input before the county voted on the deal. Those appear to be the primary concerns, along with what the stadium will mean in terms of traffic in the Cumberland area, the quality of life, etc.
What has been the reaction of Cobb’s taxpayer watchdog groups?
I would only add that the Braves clearly think the private develpment will bring in large profits to the team. The plan they've announced includes bars, restaurants, condos/apartments, office space and other retail. There has been mention of an ampatheater. This type of development is something they've long wanted outside of Turner Field, and I think it was a major driver in the team's move to Cobb County.
There's been some signals in recent weeks that building the private development has become more complicated than what was presented last fall. The Braves have missed a self-imposed deadline to choose a developer and one of the development teams that were in contention dropped out earlier
this month. So, I guess it’s still very much an open question about how all this is going to play out.
For their part, the Braves chose not to be interviewed for our story. So their silence leaves more questions than answers at this point.
the two sides have made public thus far mention the mixed-use development, there’s nothing in them that guarantees or requires the Braves to invest that much for the stadium to proceed. In fact, the one executed document governing the stadium thus far, the Memorandum of Understanding that the Cobb Commission approved last fall, doesn’t require the mixed-use development as a condition for the stadium to move forward.
The Braves have said they plan to invest $400 million in a mixed-use development adjacent the stadium. It’s a main selling point for both the Braves and Cobb officials for why it’s a good deal
for the public to invest more than $300 million in local dollars to help build the stadium for the Braves.
All the money the Braves are presumably going to invest in Cobb is a big selling point for Commission Chairman Tim Lee.
How does the larger planned commercial/entertainment district come into play?
That ratio was put out last fall by Cobb and the Braves on a one-sheet financial overview. That was a major selling point that the team is picking up the majority of the cost. That 45 percent estimate also does not factor a provision of the deal that allows the team to cut its investment in the stadium by $50 million and pocket those savings. If you add that, plus the additional $18.2 million borrowing costs
Then it becomes closer to a 50-50 split. There are other costs around the stadium that aren’t factored into that equation. They are not direct stadium construction costs, but will likely carry a public cost. They include public safety costs, possible transportation upgrades and legal bills the county may still incur putting the deal together. Cobb officials point out that if there are construction overruns the Braves will cover those expenses. So it’s still sort of moving target and the bottom line is the public won’t know what percentage it is paying until probably years from now.
Here’s another figure to discuss: 45 percent. That’s what Cobb taxpayers were expected to cover, while the Braves were expected to pick up 55 percent, according to the original announcement. Is that ratio expected to change?
The take-aways from Gwinnett are that stadiums always cost more than advertised, and that mixed-use develpoments adjacent to stadiums can be difficult to accomplish. Gwinnett is home to the Braves AAA team and was supposed to cost $45 million. The final price was $64 million when it opened in 2009. And in terms of the promised mixed-use development near that ballpark, only 300 or so apartments have been built thus far -- none of the bars, restaurants, office or shopping. For decades, pro sports stadiums built with taxpayer dollars have been sold as an anchor and catalyst for other economic activity and development. That often times doesn’t happen or happens on a lesser scale than what was promised. That has occurred at other big league ballparks as well, including St. Louis and Cincinnati.
Are there any lessons we can draw from the Gwinnett Braves stadium project?
There is also the possibility of the county incurring additional costs for roadwork and infrastructure. The county will need to spend at least $1 million, for example, on signs directing traffic to the ballpark and parking. There is a traffic study, due for completion later this year, which will help determine the additional work necessary for the stadium.
Right now, we don’t know the exact amounts of additional costs, in part because we haven’t seen the final agreements being negotiated between the county and the team. We have previously reported that the county’s former Director of Public Safety has said the county will need to build a new fire station in the Cumberland area (about $4 million) and have to buy upgraded communications equipment for the stadium ($2 million). The former director has also said the county will need to hire an undetermined number of new police officers and patrol cars – both of which are in chronically short supply at the department, as has also been written in the AJC.
Certainly, the county will incur additional legal fees from outside attorneys they have hired to negotiate agreements with the Braves and research other issues. In other jurisdictions, those legal and consulting costs have run into the millions of dollars.
What other unknown costs might be out there?
These are big projects and they are a major undertaking for a local government with ongoing costs. So it's not uncommon for them to be more than initially billed.
A recent study from a Harvard professor found that the public has spent something like $10 billion on pro sports stadiums beyond the initial cost that was projected. Now, not just hard stadium costs, but transportation costs, ongoing maintenance, lost tax revenue and public safety costs.
How normal are these additional costs? Did this happen with other sports venues?
Thanks Desmond. The Braves and Cobb county will jointly choose a construction manager that will be responsible for overseeing all aspects of ballpark construction. They recenetly invited firms to submit proposals for that job, and will choose a firm later this year. In addition, the county will hire a project manager to oversee the public's interests in the project. The team and the county certainly think they can have all the work done by 2017 ... and history suggests they are correct, that ballparks can be built in 3 years or less. The complication to that is the fact that the Falcons will be building a stadium 12 miles down the road, and the Braves also want to build a significant mixed-use development. All of that will be happening at the same time, and could impact the cost of labor, materials, etc.
We asked that question of the chairman, and he responded that it is not an important detail because the county’s annual payment is still $24 million, and that was the important promise to the public. Cobb can afford that payment, Lee says.
It’s unclear why these costs weren’t discussed last November. Commission Chairman Tim Lee told us they didn’t know the total at the time. It also seems like Cobb officials were more focused on the annual payment of $24 million, not all the details such as financing costs and interests costs. They told the public last fall they would issue $368 million in bonds. But because of these additional borrowing costs they now plan to issue $386 million in taxpayer-backed bonds.
That is for capitalized interest ($15.1 million) and estimated bond issuance costs ($3.1 million). The bonds will be issued later this year but Cobb won’t start repaying them until 2017 when the stadium opens. So the Cap interest helps cover interest payments prior to that moment when they start repaying the bonds. The issuance costs include bond attorney fees, rating agency fees and other costs associated with issuing the 300+ in taxpayer-backed bonds.