Reuse or renovate?
http://www.fortwayne.com/mld/journalgazette/news/editorial/16938623.htm
From the article:
"Allen County and IPFW officials are looking for answers. Community leaders hired Minneapolis-based CSL International to study what will happen with Memorial Stadium if a ballpark is built downtown."
"Randy Brown, general manager of Memorial Coliseum, said Memorial Stadium was built for about $6 million at a time when most communities were spending about $13 million to build stadiums."
"The Hardball partners have put a price tag of $10 million to $12 million on the improvements they would like to see at the stadium if the Fort Wayne City Council rejects the idea of moving downtown."
"Knowing all the facts about the renovation costs and reuse potential of the old stadium will help everyone make an informed decision about a new ballpark.
Part of being informed, however, is knowing that the Harrison Square project is about more than the baseball park. It has the potential to attract more investment. Downtown condos and more retail, along with a hotel and the ballpark, will say volumes about Fort Wayne."
Tuesday, March 20, 2007
Studying The Stadium
Posted by scott spaulding at 3/20/2007 08:13:00 AM
Labels: IPFW, Memorial Stadium, Randy Brown, Walt Branson
Subscribe to:
Post Comments (Atom)
28 comments:
I can't even begin to describe how utterly stupid this idea is.
I think the Hardball Capital group will have a hard enough time filling their brand new fancy-schmancy stadium when there isn't a game in session.
And now we're to believe that the community can support a second lower quality stadium that will never have professional baseball in it?
They could've given me half of what they're paying those consultants and I would've applied some common sense and told them that there's no chance in hell.
But that's not what this is about. Those "community leaders" are trying to get the public on their side by appealing to the "waste" of tearing down Memorial Stadium. By doing this, they think they can get the county to subsidize their use of the stadium. Don't waste your money, we can see right through your plan...
You are right, Jeff, our City officials are willing to waste money on yet another consultant, this one to tell us the obvious: we have no use for 2 minor league ballparks.
I have to give Randy Brown a little credit, though, for not jumping on the Hardball Capital bandwagon. He, unlike the newspapers and every City official conducting the various public "information" sessions, refused to blindly endorse the Hardball Capital renovation estimate. Here is what the BaseballPlus Committee said about the issue (page 9 of the report):
"While the Committe did not attempt to identify the exact nature of the repairs and renovations that would be required, our discussions with those familiar with the facility [Memorial Stadium] led to a planning assumption that the near-term cost could be in the neighborhood of $5 million."
The guys from Hardball Capital double the number overnight, with the explicit assumption that they won't contribute a dime, and every person doing the wave for our new stadium takes it as gospel. If our BaseballPlus Committee was that far off on this issue (which I doubt), maybe we ought to question all of their conclusions.
Mark Garvin
You are both wrong. The "study" is being used by the City to get the renovation cost even higher, to make the current estimates seem low and the cost of a new stadium seem more reasonmable.
Hey Mark-
Maybe Randy Brown didn't "blindly endorse" Hardball because he and the county stand to lose the most in this deal. There is absolutely no chance to get the renovatoins needed for $5 million and Randy knows that or he would have said that it was possible.
Then you assert that Hardball wouldn't pay any of the renovations at Memorial if it came to that-a bold faced lie! Not even close to the truth!
They are having a hard time getting the numbers to work.
It is difficult to believe that we need to spend 12 million dollars to renovate a stadium that we built less then 15 years ago for 6 million dollars...
Do they think we are stupid?
No one is going to believe that we need to spend 12 million dollars to renovate a stadium... Are they?
Mike Sylvester
Mike, it appears that you may be clueless with regard to what is expected in nice minor league stadiums today. Why dont you go study the matter a little bit and re-post once you have a handle on the issue.
Sam T.
Sam, Jr. - The Baseball Plus Committee July, 2006 report, page 9 under B. The existing facility., stated, "those familiar with the facility (Memorial Stadium) led to a planning assumption that the near-term cost could be in the neighborhood of $5,000,000." Randy Brown indicated last week that is still a best estimate. Since the "temporary" food & beverage tax fund has a balance of close to $10 million as of now, it appears that it could be a real, real, real "no- new- taxes" way to meet Hardball's desires. The $8 to $10 million figure is just a "pump-up' number to help justify this boondoggle. John K
Sam-
You were on the BaseballPlus Committee that, only 9 months ago, told us that "near term [renovation] cost could be in the neighborhood of $5 million." Are you suggesting that you and your fellow committer members were "clueless" or that you failed to "study the matter" and "have a handle on the issue" before reducing you conclusions to writing? By the way, on WOWO this morning, Jason Frier acknowledged that Hardball Capital has done no studt or analysis of needed renovation on Memorial Stadium as of yet, but based their 8-12 million estimate on only a general knowledge of renovation costs at other stadiums.
Mike-
If you want to do some further study as Sam suggests, check out Midland, Michigan, where the single A Midwest League team will open next month in a brand new stadium. 33 million (against budget of $28 million) financed 100% by the team owners.
Mark Garvin
Who are the ballpark owners in Midland? Dow Chemical. A company that believes a project such as this can gain and retain the jobs they need for their business.
"Sports does bring the world together, and it does bring communities together," said Andrew Liveris, CEO of The Dow Chemical Co. "Look at the smiles on the faces (in the crowd)."
http://www.ourmidland.com/site/
news.cfm?newsid=16468300&BRD=
2289&PAG=461&dept_id=472542&rfi=6
Here's the link to what Brian posted:
Hundreds at Midland baseball stadium ceremony
"Randy Brown, general manager of Memorial Coliseum, said Memorial Stadium was built for about $6 million at a time when most communities were spending about $13 million to build stadiums."
Memorial Stadium was created $6 million behind comparable cities to begin with. This stadium was built fast and cheap. Add the $5 million mentioned in the baseballPLUS report for upgrades and you're looking at roughly $11 million to bring Memorial Stadium back up the competitive level with other Midwest single A teams.
As Jason Freier mentioned on WOWO this morning, the numbers are estimates. The Harrison Square proposal is obviously not yet completed.
So Brian - Do you have a "Dow" in Fort Wayne that will enable really doing Harrison Square without tax dollars? If so, call Sam, Jr. & Tim P. before their presentation to the other 7 city council members in a week or so. John K.
There is obviously no such similar "Dow" in Fort Wayne let alone in downtown Fort Wayne.
(I still think that if this project is approved, a Fort Wayne company will step forward with major sponsorship. Yes, it is no Dow Chemical paying for the whole thing.)
Do you really have a problem with using TIF, CRED, and Cedit? Believe it or not, I was just as skeptical as you at first. (Which is part of the reason for creating this blog.) If this project can be created to enrich downtown then great. If it can be created without raising your property tax dollars or my property tax dollars then even better. TIF dollars use the increased amount of property taxes from the designated sites. Has anyone considered that the retail and condos that Hardball Capital would own would be paying the majority of these taxes along with the Marriott hotel owners. The amount generated from these two groups would, I believe, surpass the amount of property taxes the city received from Belmont, Bill's Palace and empty parking lots. This does not amount to an increase in your monthly mortgage. (Mike Sylvester would argue that it will increase 1/10th of 1 percent.)If this project raised the property taxes of everyone in Fort Wayne, I would not be excited about this project or buying a house this summer, trust me.
Until we learn otherwise I am still giving this funding package a chance. Downtown Fort Wayne has not received many options such as Harrison Square. Let's at least make our final decision based on final numbers. I am looking forward to the day when these details can be posted to the blog. Not just for the readers of the blog, but for my own information as well.
John K,
Would you happen to be John Kalb?
Brian-
Look a little further. Dow Chemical does not own the Midland team; they purchased the naming rights for about $280,000.00. The team is owned, and stadium paid for, by the Midland Baseball Foundation which, as I recall, was started by a couple of wealthy former Dow execs. I have no way of knowing how their personal wealth compares to that of the members of the Atlanta investment partnership that is Hardball Capital.
Much of the funding was through foundation contributions. Northeast Indiana has many large foundations. We apparently chose not to seek similar funding, although it is common with single A ballparks.
If the wealth of the owners is a factor for you, how do you decide that Hardball Capital needs us to fund 86% of their facility?
You understand what I meant by the connection to Dow in Midland. The foundation is primarily funded by the Dow company. I would love to see something like that in Fort Wayne, wouldn't everyone?
I would welcome any such similar foundation gift from any foundation in Fort Wayne with wide open arms.
From above Dow Company link...
"Shareholders might have noticed a $100 million cache set aside from fourth quarter earnings announced last week -- a contribution to The Dow Chemical Company Foundation.
Among a myriad of other community needs across the nation, the new pot is a place from which money can be drawn and given to the Michigan Baseball Foundation, which is the mode of transportation for bringing a new minor league baseball stadium and team to Midland. While a number of local foundations are expected to contribute to the effort, Dow is one of them. No formal request for funding has been made and no number decided, but the foundation is the primary source for Dow's U.S. giving."
Mark,
Funny you should use the Dow-Midland example because it actually supports the reasons for Harrison Square!
The team in Midland was bought and the stadium funded almost entirely by the Michigan Baseball Foundation. That foundation was funded by Dow, the Dow Foundation and Dow executives. The reason that they went out and bought a baseball team and built a stadium, however, is closely related to the "brain drain" issue we are looking to address in Fort Wayne. Dow is, obviously, based in Midland and its continued success is dependent on recruiting top notch talent (primarily engineers, but also people with finance and marketing backgrounds) to the company and to Midland. They have found this increasingly difficult over time and have done various studies to see how they can be more successful. One of the issues, not surprisingly, is that, regardless of the financial package they offered, the lack of vitality and amenities in Midland hindered their efforts to compete with other companies in other cities for the talent that Dow needs. As a result of these studies, a baseball team was identified as an amenity they could offer that would increase the attractiveness of the area (I believe there are other initiatives they are taking at the same time, this is not "the answer," its just just part of the answer).
So, Mark, yes our community does not have a Dow or a Van Andel (Grand Rapids) to step forward and fund the stadium. But underlying the decision to build the Dow stadium is all of the same brain drain issues that we are facing.
Sam T.
Sam, Jr. - How can you even think of comparing a totally private funded ballpark with the one you propose in Harrison Square, with over 50 % of the cost coming from public taxes? The end justifies the means, I guess. John K.
The DOW situation was about job RETENTION. What this city needs is job CREATION.
While the Harrison Square project probably would help w/ job retention I have yet to see any valid argument that claims it will help with job creation.
Until I see such an argument, I will continue to maintain that the city should use this type of public investment in a way that's more conducive w/ creating quality jobs...
John K, I realize you are not open minded about $1 being spent on this project and that status quo is good enough for you.
However,
The public/private distinction on Dow Field is not as clear cut as you make it. Funds in a foundation like Dow's (or the foundation that funded the Greensboro stadium) are really in many ways more like public money than like private money. As you may know, once money or any other asset is put into a foundation like this it must be used for a purpose consistent with its mission--if someone tries to redirect the money to the advantage of a private or for-profit group, someone (usually the state attorney general) can step in and question the use. So money coming out of a foundation is money used for one project instead of other things that presumably would benefit the public at large (libraries, museums, shelters etc.) and lessen the need for public funds to do the same. If the City helps build Harrison Square and fort wayne foundations spend their funds combating homelessness, assisting the arts, etc., one could make the argument that it is little different than if those Foundations funded Harrison Square and the City then needed to spend more on homelessness, arts subsidies, etc. because the Foundations had less resources left over to do so.
Thus, I would contend, that unless the money is coming from a for-profit entity that has no restrictions on use (which, by the way, is the case with all of the money Hardball is putting into the project), the public/private distinction is nowhere near as clear cut as you seem to think.
So, I ask you John K., how can you compare foundation dollars to private dollars?
Sam T.
Here is the reality Sam. The only City that has put more public money into a single A Baseball stadium in the last 5-10 years is Gary Indiana. Typical non-public funding is 50 to 100%. Here, the public is paying 85% or more of the cost.
The Hardball Capital guys smelled the desparation in the air and pounced.
Anon,
To be fair I think city leaders tried to address the public financing concern at the YLNI meeting. The gist of their comments were that if this were only a stadium then they would certainly require more private investment. However, they are looking at the project as a whole and are happy with the level of investment from Hardball Capital in Phase1 - that includes the retail and condos around the stadium.
Now as far as I can tell the investment numbers Hardball Capital is using are the projected VALUES of the property and not their INVESTMENT. This obviously would make the TRUE split much more favorable to them. I'm not certain of this so if anyone knows for sure then feel free to correct me...
Oh yes, Hardball Capital "pounced" on our city by investing millions of dollars into it. That's exactly what happened. That is about the dumbest thing I have ever heard of. I'm sure that they are trying like hell to figure out why they believe more in our city than we do...I wouldn't blame them. They probably think Ft. Wayne is full of a bunch of cynics. Everyone if Ft. Wayne has their own "conspiracy theory" on why the city leaders are pushing this project. Fact is, they want to make Ft. Wayne better...
On a side note, Randy Brown DOES stand to lose the most if the stadium leaves and THAT is the exact reason he does not endorse it.
I'm with Jeff. I'd like to know whether the numbers reflect Hardball's actual investment of a certain amount of dollars, or whether the quoted numbers are projected property values.
Anonymous ("Mr. Pounce"),
I would not attach my name to such a ridiculous post either.
Sam
barranda=
Here is what I have been told concerning the condo/retail portion of the project. My sources are Steve Brody (primarily), Mark Becker and the Mayor.
The 18 million figure (12 million condo, 6 million retail) is total investment cost, sort of. It includes the value of the land the City will donate to the condo retail project, which the City estimates at $3 million. The 18 million does Not include any portion of the $19 million in STILL unallocated Phase I project costs, all of which are to be paid by the City. I suspect but do not know that only a small porion of those costs (less than a million?) would be properly allocated to the condo/retail project, as the vast majority will be allocated to the Stadium, primarily for land acquisition costs.
Hardball Capital (or its affiliate, Barry Real Estate) is required to invest $15 million into the condo/retail project. I have been unable to obtain any information concerning estimated breakdown of this amount between hard costs (bricks, mortar, construction wages, etc.) and "soft" costs (cosulting fees, allocated overhead, etc.). Steve Brody assured me that he is aware of the potential for a large developer to over allocate "soft" costs to a project like this, reducing the actual out-of-pocket investment, and that the agreement will require that such costs not exceed "normal and customary."
Mark Becker gave an estimate of the hard and soft cost breakdown for the Stadium at the YLNI public meeting. He estimated that the $30 million construction cost for the stadium will be $23 million in hard and $7 million in soft. The $30 million stadium figure is only for construction; land acquisition, site prep, allocated infrastructure are all separate City obligations which I estimate to be well in excess of $10 million.
I assume that of the $15 million Hardball investment in the condos/retail, as much as 25% may be for soft costs, based upon the stadium estimates. Hardball also recieves $3 million in tax credits from the City for the condo/retail project, which will reduce their net investment to $12 million. The project itself, though, will still benefit from the $3 million in City land, unspecified amount of City provided infrastructure, site prep, etc., and $15 million in hard and soft cost Hardball investment. Hardball will own the completed project, including the land upon which it sits.
If the completed project is worth (could be sold in an arms lehgth transaction) $20 million, the profit (roughly $8 million, gross) will be Hardballs. If the completed project is somehow only worth $10 million, the loss (roughly $2 million, gross) will also be Hardballs. In fairness to Hardball (or Barry Real Estate) in a loss or break even situation, I would also credit them with loss of use of their capital, or opportunity cost. I'm guessing that there are many other less risky real estate projects available to them, where they can reasonably project at least a 20% net profit (annualized) on their capital investment.
When I criticize the miniscule Hardball contribution to the Stadium ($5 million out of $40 million), others rightly point out that I need to consider their investment in the condo/retail project. I agree. The problem is in how you value that contribution. In my view, the question should be how much additional incentive, if any, would be required to induce another competent developer to take on the same project. For example, would Sturges take on the same project on the same terms (his $15 million plus $3 million in land, $3 million in tax benefit, and unspecified infrastructure contribution from the City) or would he require an additional $1 million, $2 million or more in City subsidy in order to view the project as providing an acceptable rate of return? That additional amount, if any, is the amount that I would credit to Hardball as "contribution" to the Harrison Square project.
This probably isn't as helpful as just calling people or statements "ridiculous" but you seemed interested in information, and this is what I have.
Mark Garvin
Barranda-
One clarification, and I'm no tax expert. Hardball may have to account for the City contribution to their project in some fashion (perhaps realize it as income?), so I am probably off at least on the gross profit number. My analysis of valuing their contribution remains the same.
Mark Garvin
Mark,
Thanks for the info.
I think you hit the nail on the head in regards to the opportunity of other investors. I've argued for some time that it's disingenuous to suggest that NOBODY wanted to invest in downtown. The truth is NOBODY has received these kinds of subsidies from the city. It would be interesting to see if other local developers would've jumped at the current opportunity - I do not know the answer to that.
And let's not forget that not only is Hardball getting getting these subsidies but also, according to Mark Becker, they are getting right of first refusal for additional phases in the project. I'm not sure I agree w/ that philosophy given the fact that local developers have been locked out of phase 1...
Post a Comment