Lee said he believes all commissioners will vote in favor of the 30-year “memorandum of understanding” at the board’s Nov. 26 meeting.
“I am confident it will pass with a unanimous vote,” Lee said. “As an economic development project this small investment by the residents will bring back and yield a significant growth in our digest, in our sales tax, in our economic viability, it is a relatively small investment for a huge return not only for the Cumberland area but all of Cobb County.”
The Braves organization intends to buy a 60-acre wooded parcel off Interstates 75 and 285, where it would move from Turner Field, off of Interstate 85 near downtown Atlanta. The new stadium and parking spaces would sit on 15 of those 60 acres. The Braves have an option to buy the site from Bethesda, Md.-based B.F. Saul Co.
After buying the tract, the Braves would immediately deed the 15-acre footprint for the stadium to the Cobb-Marietta Coliseum and Exhibit Hall Authority. The Exhibit Hall Authority would then enter into an agreement with the Braves, allowing it to build on the site and manage the stadium’s business. While property taxes would not be paid on the 15-acre piece, taxes would be paid on the remaining 45 acres, which the Braves plan to develop into a strip of restaurants, hotels, shops and other entertainment venues.
Braves pay 55 percent
The total budget for the stadium, which includes parking and related infrastructure, is about $672 million. Lee estimated that includes 2,000 parking spaces.
The proposal is for the Braves to pay 55 percent of the stadium cost, or $372 million. The Braves’ upfront commitment is $280 million or a minimum of $230 million, according to a draft of the agreement. The Braves’ total contribution of $372 million over the 30-year life of the deal consists of $280 million paid by opening day 2017 and $92 million financed over the 30 years and paid by the Braves’ guaranteed revenues of $6.1 million in non-ticket revenue per year.
“They will guarantee them,” said Jim Pehrson, the county’s finance director. “If there’s a strike (by Major League ballplayers), for instance, they will guarantee those payments.”
The guaranteed revenue of $6.1 million breaks down this way:
• Rent payments to county: $3 million
• Naming rights revenue: $1.5 million
• Parking revenue: $1.5 million
• Marquee advertising revenue: $100,000
Cobb pays 45 percent Cobb County’s portion of the stadium is $300 million or 45 percent of the cost.
Of that amount, the county will pay $14 million to improve roads around the stadium.
Earlier this week, Lee said a pedestrian/shuttle bridge that would extend over I-285, connecting the stadium property with the Galleria office park was included in the $672 million cost of the stadium. On Thursday, Lee reversed himself, noting the proposed $3.5 million county bridge would be an additional county cost.
The $672 million stadium cost does include the cost of relocating a gas and fuel line that goes through the property, though, he said.
The Cumberland Community Improvement District, a self-taxing commercial property district, has pledged to give $10 million to the project.
“There will be a transportation project identified whether it’s a parking deck or something and they will pay $10 million towards that in the footprint of the stadium,” Lee said.
The plan is to issue $368 million in 30-year revenue bonds through the Exhibit Hall Authority. The Atlanta Braves’ annual financial commitment will cover $92 million of the bond issuance. Annual payments on the remaining $276 million debt will be paid from a variety of sources including hotel/motel taxes, a new 3 percent rental car tax, a new 3-mill property tax on commercial property owners and apartment building owners in the Cumberland CID area and an extension of the current parks bond tax that expires in 2017.
County hotel/motel tax revenues
The proposal would allocate an annual $940,000 from the county’s portion of its 8 percent hotel/motel tax. Pehrson, the district’s finance director, said the county collects about $11 million annually from that tax and all of it goes to the Exhibit Hall Authority. The authority keeps 62.5 percent and gives the county 37.5 percent.
“We get maybe $3, $4 million-plus,” Pehrson said. “It is first committed to pay off the debt from the Cobb Energy Performing Arts Centre bonds.”
The excess is required by state law to be spent within the fiscal year on travel and tourism.
The excess dollars from the hotel/motel tax now go to different tourism-related functions, such as the county’s Anderson Theatre or hosting national tournaments on county softball fields.
From parks bond to Braves stadium
The county will find another $8.7 million for the project by reallocating existing property taxes. The county has three outstanding general obligation parks bonds, one that passed in 1996, one in 2007 and one in 2008. They expire in 2017 and 2018, but if the stadium deal is approved by commissioners those payments will be extended for another 30 years.
“Those are voter-approved bonds that require right now 0.33 mills to fund the debt service of $8.7 million worth of principal and interest,” Pehrson said. “We’re going to take that revenue stream and just move it over to the general fund and so that revenue stream will continue beyond the general obligation bonds and that revenue stream will be dedicated for the 30 years.”
That 0.33 mills translates to $26 a year on a $200,000 home. Lee explained why he thought keeping that millage rate on the books an extra 30 years was a good idea.
“The average resident is going to pay $26 a year for millions of dollars in returned investment and the benefit associated with that,” Lee said. “I think it’s a good investment by the Cobb County government on behalf of the taxpayers to spend $26 to create the returned investment we’re going to get in economic growth, the continued job creation, the expansion of our economy and all the opportunity that it provides for us so I think that that is a good investment.”
Three new taxes
County commissioners, by approving the stadium contract, would approve three new taxes. One is a 3 percent rental car tax, which is expected to collect $400,000 annually. The city of Marietta already imposes such a tax.
A second tax involves the Board of Commissioners creating a new tax district on top of the Cumberland CID. The reason for creating the new tax district is that state law prevents CIDs from taxing apartments or raising the millage rate above 5 mills, Lee said.
The new district would allow the county to add another 3 mills and tax apartments.
So, commercial properties that pay 5 mills now would end up paying 8 mills under the newly created district whose boundaries would roughly follow those of the CID.
The new “Cumberland Special Service District” would collect $5.2 million in new tax revenue from commercial property owners and owners of apartment buildings. Lee said he’s spoken with CID board member Barry Teague, a principal of Walton Communities, a large apartment developer, who is in favor of having the apartments in the new district taxed.
A third new tax would be imposed on hotel and motel rooms in the district. The $3 per-room, per-night charge would generate $2.7 million annually.
Turner Field is in need of millions of dollars in repairs and it’s only 16 years old, which underscores how the new Cobb stadium would also need renovations before the 30-year contract expires.
According to the draft contract, the county and the Braves would share, on a 50-50 basis, in the costs of maintenance. Costs associated with upgrades to the stadium, however, would be borne by the Braves.
“Anything that enhances the fans’ experience, like a new scoreboard, the Braves pay for that,” said county spokesman Robert Quigley.
Pehrson expects bond payments would begin in 2017.
The maximum amount of exposure Cobb taxpayers have in the deal, Quigley said, is $17.9 million, which is the annual payments on the debt service. That comes to $537 million over 30 years.
Pehrson pointed out that the “conservative” numbers being used are based on current revenue streams, not projections of future growth in those income streams.
“They don’t reflect growth,” Pehrson said. “They’re not reflecting the mixed-use development that the Braves plan, and they’re not reflecting the increase in hotel/motel tax dollars that we’re anticipating. And so as we see these revenues grow, that could be applied toward this debt service. But there will be opportunities to back off of some of these (taxes).”
Commissioner JoAnn Birrell, who learned about the proposal only last week from Lee, walked the property Thursday for the first time.
“It’s a great location,” Birrell said. “It’s a good spot for a baseball stadium – 285, 75, 41 all come together and there are other venues in the nearby vicinity to support it.”
Commenting on Lee’s belief that the Nov. 26 vote will be unanimous, Birrell said she hopes it will be, believing all commissioners should be “on the same page with the project.”
She declined to say how she would vote, however.
breakdown of braves-cobb co. deal
1. Overview: The Atlanta Braves, Cobb County and the Cobb-Marietta Coliseum and Exhibit Hall Authority will be executing a Memorandum of Understanding that sets forth their respective rights and obligations for development of the Atlanta Braves stadium in Cobb County.
2. Term of the deal: The term of the MOU is 30 years, commencing with the 2017 Atlanta Braves season. The Atlanta Braves will have the right to extend the term for an additional five years through the 2051 Major League Baseball season.
3. Stadium Project Budget: The total budget for the stadium is approximately $672 million. This includes stadium, parking and related infrastructure.
4. Allocation of Total Stadium Project Cost: Atlanta Braves Contribution: $372 million or 55 percent.
The Atlanta Braves’ upfront commitment is up to $280 million (minimum contribution of $230 million).
The Braves’ total contribution of $372 million over the life of the stadium project consists of $280 million paid by Opening Day 2017 and $92 million being financed over the 30-year term of the stadium operating agreement, and paid via Atlanta Braves’ annual guaranteed revenues ($6.1 million annually), as detailed below:
1. Rent: $3 million per year
2. Naming Rights Revenue: $1.5 million per year
3. Parking Revenue: $1.5 million per year
4. Marquee Advertising Revenue: $100,000 per year
Total: $6.1 million
Local contributions from Cobb County, the Cumberland CID and the Exhibit Hall Authority: $300 million or 45 percent.
$14 million – The local commitment includes a transportation improvement contribution of approximately $14 million that includes such items as a new bridge over I-285, a new exit ramp off of the interstate and relocating a major gas pipeline that runs through the stadium site.
$10 million – The commitment of the Cumberland Community Improvement District includes a contribution of approximately $10 million.
$276 million – The Cobb-Marietta Coliseum and Exhibit Hall Authority will issue $368 million of 30-year revenue bonds of which the Atlanta Braves’ annual financial commitments will cover $92 million of the bond issuance. Annual payments on the remaining $276 million will be paid from the following sources (projected totals):
1. Existing Hotel/Motel Tax – (Cobb County Portion): $940,000.
2. Reallocation of existing Property Tax Revenues (no increase in property tax millage rate for Cobb County
3. New 3 percent Rental Car Tax: $400,000 (to be approved by County)
4. New Cumberland Special Service District Tax: $5.2 million (Consists of approximately 3 mills property tax increase in approximately the footprint of the Cumberland CID. This equals about $120 annually on $100,000 market value property.)
5. New Cumberland Special Service District Hotel Circulator Fee: $2.74 million ($3 per room per night charge for hotels and motels in district footprint.)
5. Stadium Design and Construction. The Atlanta Braves organization will serve as the design and construction manager for the project. The Atlanta Braves will be responsible for any cost overruns.
6. Operation and Management of Stadium. Except for the County’s right to conduct a limited number of special events, the Atlanta Braves have exclusive rights to use and operate the Stadium and permit third parties to do the same.
7. Stadium Revenues. Except for the county’s share of naming rights revenues, parking revenues and marquee advertising revenues, the Atlanta Braves will retain all revenues associated with the stadium.
8. Stadium Expenses. The Atlanta Braves are responsible for all operating expenses of the stadium.
9. Additional Agreements. The “memorandum of understanding” also sets forth that the parties will execute more definitive agreements in connection with the stadium project including a Stadium Operating Agreement, Development Agreement, Non-Relocation Agreement, Transportation and Infrastructure Agreement and any other agreements that the parties deem necessary.