Winston-Salem City Council likely to approve new stadium deal
WINSTON-SALEM, N.C. — Winston-Salem leaders are stressing that taxpayers won’t be picking up the tab for BB&T Ballpark as they round the bases for a vote tonight on a new stadium financing deal.
Citizens will get their say in a public hearing that takes place before the vote.
Although some city leaders had said recently that the city could actually net $4 million over the 25-year term of the new deal, Lisa Saunders, the city’s chief financial officer, sought to downplay that chance in a conversation last week.
“The $4 million is part of our projection, but the debt is a floating-rate debt,” Saunders said. “There are some projections about what the rate might be, but we don’t know what it might be for the next 25 years. The city’s intent was to break even and not make money one way or the other.”
The city and the Dash, the Single-A farm team of the Chicago White Sox, could sign the documents setting forth the new financial arrangements by the end of April.
When the city’s Finance Committee heard a report on the deal last week, Council Member Derwin Montgomery abstained on the vote to send the matter to the full city council, saying in part that he wanted information on how the new deal with the Dash compares to the old one.
City Manager Lee Garrity said in an email that he sent to council members on Friday that under the existing agreement with the Dash, the city was projected to net about $1 million over 25 years – although Garrity, like Saunders, couched the figure in uncertainty by saying that too depended on actual interest rates.
“The city is not trying to make money off the team,” Garrity said.
The city and the Dash announced on Mar. 25 that they were negotiating on a new lease in connection with a new ownership group taking control of the team.
The new owners include the White Sox, the team’s parent club, with the new ownership group holding 58 percent of the Dash. The current owners, who are local, will retain a financial interest in the team.
The new owners would pay $8 million to buy into the team. The new money would be used to pay off outstanding team loans as well as paying down part of a short-term $15 million construction loan that the team secured in 2009.
The team would use $2 million to reduce that debt to $13 million. The city would then pay off the short-term loan with new long-term financing. The team would then pay the city $1.8 million annually, with the amount gradually increasing over 25 years to pay off that $13 million loan, plus $18 million in loans provided earlier.
The deal gives the city free and clear ownership of the ballpark, since the team’s $15 million construction loan had used the city-owned stadium as collateral.
Mayor Allen Joines said that discussions with the team started in December, with Joines and Finance Committee members D.D. Adams and Robert Clark representing the city.
“Our first objective was not to have any taxpayer dollars go into it,” Joines said. “We have a strong new partner in the deal and the potential for a better return.”
Part of the deal involves the reduction of the ticket surcharge that the team pays the city. Currently at $350,000, the new agreement reduces that amount to $175,000.
But city officials add that the ticket surcharge reduction, a request of the team’s, does not put the city in any worse financial shape. That’s because the annual payment – the lease plus the ticket surcharge and a payment equivalent to what the stadium would pay in city property taxes – is designed to cover all the city’s costs.
In short, city leaders say, the stadium won’t require a subsidy from the city, and the debt won’t require any taxpayer funds to service.
“My responsibility is to make sure the city stays whole in this transaction, and we do,” Saunders said. “The bottom line should be a wash. The White Sox are coming to town, they are making this investment, and the city is going to stay whole: The taxpayers aren’t paying a dime.”
Clark said that the new owners wanted “something uncomplicated and straightforward” compared to the myriad of financial arrangements that have covered the ballpark since the 2007 and 2009 agreements.
Clark said he is confident the city will approve the new lease because of the advantages it brings.
“We are eliminating a construction loan that used the stadium lease as collateral and which was outside our control,” Clark said. “Now with all the financial payments, the city has control over it.”
Geoff Lassiter, the president of the Dash, called the change in the ticket surcharge “part of the entire package” surrounding the new stadium deal, but didn’t elaborate.
“We see it as a $1.8 million payment,” Lassiter said, referring to the total amount the team will pay yearly.
Lassiter said the new deal with the city evolved after the team looked for a long-term solution to the $15 million construction loan debt.
“It makes sense for the city to finance it so that there is not a third party in front of the city,” he said.