We Need to Help That Poor Billionaire Out

By Dick Hall-Sizemore, this originally appeared in Bacon’s Rebellion and is reprinted here by agreement. 

With all the huffing and puffing about CRT, face masks, and “wokeism” at UVa, Bacon’s Rebellion has ignored what could be the biggest scam in the General Assembly:  the subsidization of an ultrarich guy and his plan to build a football stadium and surrounding “mini-city” in Northern Virginia.

The General Assembly is now in the midst of one of its periodic quests to lure a professional sports team to Virginia.  This time it is the Washington Commanders, the team formerly known as the Redskins.

Two bills have passed their respective houses in the General Assembly related to this issue:  HB 1353 (Knight, R-Virginia Beach) and SB 727 (Saslaw, D-Fairfax).  Both would create an authority that would have the power to issue bonds to finance a portion of the cost of the project.  It is estimated that the stadium would cost about $1 billion.  The bonds would be financed with a mechanism commonly used with such projects: tax increment financing. Briefly, that would involve a portion of the increased tax revenue resulting from the project being dedicated to the debt service on the bonds.

Each bill provides that no revenues of the state or any localities are pledged to support any bonds issued by the Authority.  They also provide that, should the Authority build a stadium, the team must agree to remain until the bonds are paid off.

The proponents of tax increment financing claim that the project being financed would bring in revenue that the state or locality would not have realized otherwise.  Therefore, the proposal is not costing the locality or state anything.  As Sen. Saslaw put it, this would be a “huge economic development project” that would not cost the state “a nickel.”

The two bills differ on the sources of revenue.  The House bill would dedicate two percent of the sales tax revenue on items purchased in the complex and require the team to pay at least 50 percent of the stadium naming-rights revenue to the authority until the bonds were paid off.  The Senate bill would also use two percent of the sales tax, but would also use the state income tax paid by team executives and players.  The team would be allowed to keep all the naming rights revenue.

Dan Snyder, the owner of the Washington Commanders, has made it clear that he wants to build not just a stadium, but a vast commercial and residential complex that supporters call a “mini-city,” including a convention center, concert venue, hotels, restaurants and housing.

The Washington Post (that newspaper much maligned by some Bacon’s Rebellion readers) has revealed that the bills would enable the use of tax revenues to subsidize not only the stadium, but the entire commercial and residential development surrounding it.  The key in the bills is the ability of the authority to issue bonds to finance the “facility”.  In the area of legislation that is often overlooked, the definitions section, “facility” includes any “other directly related properties, including onsite and offsite parking lots, garages, and other properties, all located on a site specified by the primary team and consented to by the Authority and the county or city in which the site is located.”  Furthermore, the Senate bill would enable the Authority to issue bonds on an on-going basis.

Michael D. Farren, a senior research fellow at the Mercatus Center at George Mason University commented, “I don’t think it should be called the ‘stadium authority’.  I think they should call it the ‘Snyder City authority.’” He called the ability to issue new bonds “an endless gravy train of subsidies.  As long as we keep some bonds active, we can keep the gravy train rolling. I don’t think that in reality you would ever see everything paid off.”

Both Saslaw and the chief lobbyist for the team, Mark Bowles, chairman of  McGuireWoods Consulting, denied that it was the intent that the bonds could be used to finance anything other than the stadium.

“All the stuff outside the stadium is Snyder’s obligation, 100 percent,” asserted Saslaw.  After the Washington Post’s reporting appeared online, both Saslaw and Bowles pledged to address those concerns in the bill in the conference committee appointed to reconcile the differences in the bills.  “We’ve prepared language to ensure that nothing other than a portion of the stadium can be funded,” Bowles said.  Saslaw told the Post he will move to make sure the bonds can only be issued once and can only finance the stadium. “When the bill comes out of conference, it will be drawn tight as a drum,” he said.

In many ways, the late Jack Kent Cooke was not an admirable character, but at least he paid for his new football stadium in Maryland for the Washington Redskins, rather than ask the government to pay for it.

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