The Devil is in the details

by
February 19, 2009

You guys are probably sick of me railing against the Marlins’ stadium deal by now. I’ll stop railing when they stop giving me things to rail against:

If the devil is indeed the details, then the devil casts an awfully long shadow in the construction agreement between Miami-Dade County and the Florida Marlins for a new ballpark. Sprung both on the Miami City Commission and Miami-Dade County the night before votes on final approval, it’s pretty clear County Manager George Burgess was eager to see the agreement pass before anyone realized what the Marlins were receiving.

In the end, quite a lot. And in the end, if City Commissioner Marc Sarnoff did nothing other than delay the deal so the entire agreement could be examined, he’ll probably go down as a hero . . .

. . . We’ve already covered the fact the total cost of this project will be a lot closer to $2 billion than the $606 million figure tossed about by the Marlins. Also noteworthy: the fact that there’s no analysis of the bonds needed to fund construction. Are they even sellable in today’s economy? And if so, what interest rate is taxpayer looking at? Saying hotel taxes will pay for the bonds is one thing; not saying how much the bonds will cost (not even an educated guess) is another.

And if the hotel-tax revenue comes up short, who will pay off the bonds? Not the Marlins. Rather, Miami-Dade taxpayers will.

I spent the last four years of my private sector life litigating the cost overruns and the consequences of a bond shortfall in connection with a publicly-financed minor league hockey arena on behalf of a municipality. In that case, the construction agreement was so in favor of the municipality that it was almost comical, and the end-of-project expenses were borne by the contractor. Despite this, millions were spent by taxpayers to fight a construction money grab. If the contract had been less favorable to the city, taxpayers would have taken it in the hiney from the get-go and then still would have had to incur legal fees to try and get back to even. From the sound of it, that’s what Miami is in for if this deal is approved.

The Marlins’ moment of truth was last Friday and it passed without a deal. I have this feeling that they won’t get that good of a shot again.

(thanks to Pete Toms for the link)


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VanderBirch
15 years ago

I have a visceral hate for Jeffrey Loria and his croney David Samson. Publically funded stadiums are wealth transfers to already wealthy owners, but at least most owners will actually invest some of their money in the baseball team.

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Grant
15 years ago

Hey Craig,

Out of your purview a bit, I realize, but looks like my home state of Maryland is about to subsidize a soccer team after both DC and Virginia said no dice.

http://www.washingtonpost.com/wp-dyn/content/article/2009/02/18/AR2009021803582.html

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pete
15 years ago

Burgess should sell it as stimulus if he doesn’t want anyone to bother reading it.

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J. McCann
15 years ago

No, please keep posting about this whenever there is something new.

If the Miami taxpayers know what they are getting into, and still they approve of this deal, then fine.  But they should not ram it through in secret.

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Maury Brown
15 years ago

I don’t know if it ever happened before the wheels came off on Friday, but Burgess did not release the repayment schedule for the bonds, so it has been unclear what the total would wind up. The Herald reported that it could be between $528 million to more than $1.1 billion. However, the $1.1 billion was in today’s dollars, so it’s more likely that the schedule would be down some from there.

The S. Florida Biz Journal had the following before Friday’s train wreck:

  County Manager George Burgess said he recently met with Citigroup, Bank of America, J.P. Morgan and Goldman Sachs, and was told they were all interested in doing business with the team for its portion of the stadium funding.

  “They indicated that there is an appetite in the marketplace for these types of financings, and that they could secure the team portion of the financing even in today’s market,” he wrote.

  Terrence O’Grady, senior vice president of municipal trading for FMS Bonds, said recently that the market for issues has improved and rates were near 6 percent, down from 7.5 percent to 8 percent in December.

  “It seems like municipal bonds have now started to right themselves, and their timing might be good if they start toward the end of the year,” he said.

Not sure where the “$2B” price tag came from, but that’s simply slicing hairs. The deal is considerably more than what is being advertised, as was Citi Field, and new Yankee Stadium, and… and… and…

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