- 5/16/2025
How tax dollars will help fund a new Spurs arena_720p
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NewsTranscript
00:00Yeah, so the action the council took here a little while ago was part of a
00:06legislative issue that was approved by the state two years ago. What it does is
00:11it allows cities to capture the state's portion of the hotel occupancy tax for
00:17only a 30-year period and just the increment in order to make investments
00:23in convention centers or other venues in order to increase the economic impact
00:30and the competitiveness of Texas against the rest of the country. What the
00:35county is talking about is in the venue tax is a portion of local hotel
00:43occupancy tax that has to be approved by voters and can only be spent under a
00:49certain attributes allowed by state. Why did this PFC option come about?
00:56So it came about back in 2023. There was a very limited ability for Texas
01:03municipalities to access this economic development tool. Only the city of Fort
01:08Worth had it prior to 2023. Legislation SB 2220 was approved by the
01:14legislature and the governor in 23 and it allowed that to be you like that tool
01:20to be utilized by San Antonio and Houston.
01:25I got it.
01:27Using the PFC to fund a sports arena was never part of the original plan that you
01:31all asked the state legislature legislature for in 2023. I'm curious what
01:35specifically changed the plan to make the city say let's add this arena into it.
01:40So Molly Megan asked that question and I answered it on Monday but I'll answer it
01:44again for you. Originally 2023 the convention center and the Alamo Dome were
01:49part of our whole conversation with the state. Part of what we've done over the
01:54last couple of months in working with the comptroller's office there are
01:58timelines associated with projects. Originally the council approved the
02:03designation of two projects in December of 23 the convention center of the Alamo Dome.
02:10There is a five year, Ben called it a shot clock, right? And right now as we've developed the funding
02:20framework for the district and our assets there at the convention center of the
02:23Alamo Dome we know we're going to have to size this over time. The other reality is that since the
02:30conversations and the signing of the MOU with the county and the Spurge earlier this year we have
02:36been working on a funding framework for an NBA arena. You heard Ben out there mention that the definition
02:44that's allowed under state statute utilizing the PFC is a convention center or a venue. A venue is defined a
02:52number of different ways in state law and we believe an NBA arena is potentially a use. And since the MOU
03:00that we signed with both the other entities we've been working on a funding framework. And one of the
03:05things I shared on Monday was that the funding framework which is still under development to
03:10hope to bring the council here soon revolves around five major revenue sources. One, the Spurs. Two, the county's
03:21the county's venue tax. And I know the county's working through that issue. Three, development
03:27that, private development that would occur on Hemisphere Park and the surrounding area. Four, what I'll
03:33call revenue from an arena or the, or leases, land leases for the development. And then fifth, the PFC. But as the
03:45mayor mentioned here a second ago, we have three collective efforts here. The first priority is the
03:51convention center. And over 30 years, the PFC certainly gives us the latitude to be able to
03:57utilize it. It starts small and grows. Part of the action we made that the council took today is resets our
04:03base year to 2025. So, previous actions have set that base year in 2023. But we think still for 30 years that, that's a, that's a tool, an
04:13important tool that we want to, we want to be able to, uh, utilize. I guess to escape the
04:17shot clock, why couldn't you have just, uh, made this one project, the convention center complex,
04:23and just had the Alamo Dome and the convention center in it? I mean, originally? Well, why wouldn't you have done the revision? If you, if the, if the, if one of the reasons is we have the shot clock and we are not going to do the Alamo Dome for 10 years, why not just make this complex those two original projects? Is it because the county that new tax is going to generate far less revenue expected?
04:41No. That the Spurs don't want to put as much of the cost? I mean, why not just do those two? I'm not even sure I understand the question.
04:48If you, you said there were, there were two projects, both had to be started within five years. If the problem was the shot clock, couldn't you have just done this new convention center complex with those two? Do you, you still, would you still,
05:01No, I don't think so. You wouldn't, you would have had, you have to. I'm having a hard, I'm having a hard time understanding. Well, you said it started out as two projects. Right. Why not just combine them into one under this complex?
05:09Without the arena. Wouldn't that have solved your shot clock problem?
05:14Well, no, because obviously we're working on, on a funding framework for an NBA arena with the county and the Spurs as the MOU. So, so we could have, we could have done a, we could have done a, a project for the convention center in Dome, but it's no secret.
05:30Yeah. It's no secret. We're working on a funding framework for an NBA arena along with the county and the Spurs. So it's an eligible expense under statute. Um, and it made more sense to give ourselves the flexibility to be able to call it. And that's part of the conversation with the comptroller's office is a convention center complex that encompasses all three of those potential, or two of those assets and potentially a third.
05:54Right. But why you mentioned your, it's no secret NBA arena, but at the time in December, 2023, I think it had already started to be important that you were looking at, um, an NBA arena as well. So why not just added it at that time? What changed between 2023 and now?
06:09Uh, like 24 months. I mean, so many times we've been, we've been working on this for a while. So, I mean, as this has developed, you know, and, and part of this is making sure that, that we can work with the comptroller's office. We've never done it before. There's only one other city in the state that has worked in this PFZ. So the comptroller's office has been extremely helpful in probably in helping us administer and thinking through this. Um, and it makes sense now, especially as we're working on this funding framework.
06:37But this was not because of pressure from the Spurs to have them in.
06:41No. What do you anticipate the city finally sharing?
06:43Oh, I'm sorry. One of the, it certainly had nothing to do with whatever you asked about on the county venue stuff.
06:49Okay. The fact that they're going to, the county's putting the Spurs arena down at the bottom of its priorities.
06:55I don't know anything about that. You can ask the county.
06:57That's what they say.
06:58Okay. Well then that's, that's their news. No breaking news from the city manager today.
07:04When is the city going to share its projected estimates of what the PFC is going to generate?
07:10So it's, it's a little bit less than what the state comptroller's office came up with as part of the legislative session.
07:17Um, and I think Ben shared, uh, with the, with the group on Monday, it's probably around the $2 billion range.
07:23Okay. So $2 billion is the, is the estimate you all anticipate?
07:27Yeah.
07:28That's, that, that's, that's, that's, uh, not the final number. It's around there. We'll finalize that as we do that funding framework and laid out publicly.
07:36Okay. So we can expect to see the final number when we see.
07:38Yeah, our projections. Yes ma'am.
07:39And by funding framework, can you clarify, what are we going to learn when that's publicly unveiled? How much each party plans to commit? Or how much these individual sources could raise towards this?
07:50Probably both Molly. Yeah. And there are assumptions about development and there's a, that's a big part that, that is, um, um, that we're spending a lot of time on and, um, but, but probably, I shouldn't say probably, hopefully both answers to both of your questions.
08:08You mentioned that you're planning to have a public presentation within the month. Is that going to be on the, the final framework or just the status update?
08:16I would say it's probably a status update. I don't think it'll be final yet. We've got to get some feedback from the council. And part of that is also the, the, um, the additional due diligence we have to do.
08:26To be able to get the venue tax out on the November ballot, they've got to get it out to the comptroller's office. They're looking at like a July 8th timeline. Do you anticipate, you know, do you anticipate having that, the total spending framework done before then?
08:40Uh, potentially. Yeah. But one of the things that's critical for us also that I, that'll be part of the next council update is the infrastructure needed for, uh, the, the surrounding area, regardless of what goes on the corner of, um, Cesar Chavez and 37, there's, there's infrastructure improvements that need to be done, need to be made.
09:00Um, if we do those things, um, that's more of a general infrastructure expense in the city. Um, and as we've talked about publicly before, that would have to go to the voters.
09:10If the council chooses, the council could place that on a ballot for the voters to decide whether or not to invest in that infrastructure.
09:16Would that be a bond? Yes, sir.
09:18And, um, any idea how much that's going to cost the ballpark, the infrastructure?
09:23No, we'll, we'll lay that out as we do our next presentation publicly. We're trying to finalize that right now.
09:28Any economic impact study been done yet?
09:31The, the economic impact analysis is underway right now and hopefully that will be part of the next update as well.
09:37The funding framework, do you anticipate presenting that to the mayor and council before or after the new council is sworn in?
09:43Um, we'll, part of that will, will rest on, on us getting the work done.
09:47Uh, we're relying upon some outside folks to do the economic impact analysis.
09:52Um, presumably I would think probably both right before and after.
09:56Um, I don't think it's a kind of a one and done conversation.
09:59So I think we're going to have to be sensitive to the fact that there's going to be a transition of elected officials here.
10:06And, and, uh, so probably both.
10:08But the public outreach plan is going to be happening after the funding,
10:12no, it'll probably start before Garrett.
10:14Yeah.
10:15And that'll last, that'll last longer than just, um, a couple of weeks.
10:19That's probably more of a sustained effort about how folks, um, how folks feel about, um, um,
10:26the look and feel and the attributes and the components of a district.
10:30Will they be asked about the funding sources?
10:33Will their thoughts on.
10:34I'm sure there'll be a lot of.
10:35I'm sure there'll be a lot of conversation about that.
10:37Will it, but will it factor into the final framework?
10:40Or are you anticipating just whatever's happening in the conversations between the three entities,
10:45city counting spurs?
10:46No, I mean, I think you, you'll hear that.
10:47I think the council will be interested in that.
10:49Certainly a city manager.
10:50I'm interested in getting that feedback.
10:52Those are questions that we need to be able to answer.
10:54Um, and, um, um, and I know the council, you heard councilwoman core out there.
10:59I mean, it's important to the council members and, um, and, um, and I don't think it's going
11:03to be a, um, um, a short process necessarily to, to, uh, to come to, uh, to a final.
11:11I just want to be clear.
11:12If they, if people have strong feelings about how this should or shouldn't be funded, if
11:16their input at these meetings is going to end up altering the city's plan.
11:20I would encourage people not to necessarily wait.
11:22I mean, if they have strong feelings, there's plenty of ways to get engaged right now.
11:26I wouldn't, I wouldn't say that they have to wait for the community engagement, um, meeting
11:30that the city's going to have.
11:31There's plenty of, there's plenty of mediums and I get, I get a lot of feedback directly.
11:36Um, and I'm sure the mayor and council do.
11:38So if people have strong feelings about that, that they should, they should let the, they
11:42should let us know now.
11:43By adding this first arena into this, the complex that you want to use the, this money
11:48for, does that undercut your ability to be able to achieve those?
11:53The Alamo Dome and convention center projects by now splitting this money three way is instead
11:58of two, especially since it sounds like the Alamo Dome improvements are more expensive than
12:03originally it is.
12:04No, I don't think so.
12:05Uh, Garrett, I think it gives us more latitude to, uh, figure out how we finance, um, important,
12:11uh, into our important assets like the convention center.
12:14I don't think it's as easy, uh, as just dividing that number by three.
12:18It's, uh, we have to figure out how to finance, uh, issue debt, be able to pay off that debt
12:23and do it in an incremental way.
12:25Um, and then braided with other revenue sources like development.
12:29So no, I, I don't, I think, I think today's action actually gives us a little bit more latitude
12:33to, to think through and plan for this financially.
12:35And there can't be any other project or sub projects added into that complex, right?
12:39It's only those, those three venues that the, the PFZ money could fund.
12:44Yes.
12:45Well, yeah, let me, let me, let me, let me, let me reemphasize what, what Ben said out there
12:50that in accordance with the statute, um, the PFZ can be invested in a convention center or venue.
12:57Venue is defined in state law.
12:59And Ben said it out there, coliseums, arenas, uh, the Alamo Dome, stadiums.
13:04It's very, it, it, it, it, it, it, it's defined very, um, concisely and precisely.
13:11Um, we can't use PFZ for other sources, uh, or other, other uses.
13:18Um, and that's why Ben said in some of the questioning that if it doesn't fall within the state definition,
13:24then unlikely we'd be able to.
13:26But something that falls within that definition could be added in later.
13:29I, what I'm asking is if the complex is that defined literally as only the convention center, Alamo Dome and arena,
13:37or if some other qualifying project gets added into that area, could it be used on it?
13:43Uh, you're asking me a hypothetical.
13:44I mean, I, I don't, I don't anticipate that.
13:46I think if there was, um, I don't anticipate that, but I think, I think if there was any, if there was any change a year from now,
13:54two years from now down the road, it would have to conform with state law and be consistent with what the mayor doesn't want.
14:00And then just to be clear on the shot clock stuff with the five years under the original way, under the original way the PFZ was,
14:06you would have had to start on both of those within five years, not one or the other.
14:10Yes.
14:11Correct.
14:12Now it's any one of these.
14:13Right.
14:14It gives us more latitude.
14:15Latitude in terms of time.
14:16Sorry, Eric, can we have answered this question, but why was it important for you guys to have this as an option for the Spurs arena,
14:23given like obviously that you guys are having contributions coming in from other places?
14:28Well, it, it, um, it was important because as we put together the funding framework that was referred to in the MOU,
14:35um, there are, I'm going to, I, I answered this earlier, but I'll say it again.
14:40So there, there are, as we're putting together that funding framework for, um, council feedback and review and, and, um, um, um,
14:51and discussion is, uh, the venue tax with the county that would have to be approved by voters.
14:58Um, the Spurs development in that area, uh, in the hemisphere park area, um, for, uh, revenue from development leases or revenue from a potential arena and five,
15:13the PFZ.
15:14So it's, it's one of a number of different revenue sources, but to Garrett's question,
15:19it's kind of great that, that, that PFZ is braided also with expectations and plans and priorities that we have to fund,
15:27uh, uh, expansion, uh, expansion of the convention center and down the road, uh, Alamo Dump.
15:33And we still don't have figures for how much the Spurs is contributing and how much the city's planning to contribute.
15:38Correct.
15:39And we still, is the estimate of the arena costing up to 1.5 billion still the, the maximum estimate?
15:47Uh, that, that hasn't changed since the last time we talked.
15:51I mean, that's the number of minutes.
15:52I keep hearing different things, but we're, we're planning for, we haven't got any official numbers about what an NBA arena are.
15:59We're thinking between one point, I think what we've said before, 1.3 to 1.5 billion.
16:04So how do you set up a, how do you set up a funding, a multi-crong funding plan if you don't know what the final number is?
16:10Well, I mean, 1.3 to 1.5, it's, I mean, they're targets.
16:14I mean, is it going to be 1.2? Is it going to be 1.6?
16:17I mean, I, I think based on construction prices, um, and what are the, what other, uh, bills they're going for, um, I think that's a pretty safe estimate.
16:25And then what's the timeline for how soon you anticipate starting the convention center,
16:28which is that first priority and then also the timeline for starting this first arena?
16:31I think a lot of that kind of, a lot of that discussion, uh, relies upon the kind of the followup work that the council asked us to do in December.
16:39Um, and the, and the additional, um, programming for potential building.
16:43I think the economic impact analysis is critical to that because that is an important part of our economy.
16:48Um, and, um, I, I, I, I would think that to, and the mayor said it a second ago, that would likely be the, the, the first project.
16:58Um, but we still have a lot of work to do and, and, and we'll need to get this in front of the, the new mayor council and make sure we're still on the same page.
17:06What would likely be the first project?
17:08Convention center.
17:09We've got time for a couple more questions, guys.
17:11Okay.
17:12I lost track.
17:13Are, are you also using the city's portion of, um, hotel occupancy for, for this project or just the state's?
17:21We're, um, what, what the council talked about today is just the state's portion.
17:26In terms of the convention center, we are looking at using our local hotel occupancy tax to fund part of that expansion as well.
17:35But not the arena.
17:36Right.
17:37Correct.
17:38There are restrictions around that.
17:39Which is bigger?
17:40I mean, in terms of a source of funds, is it the state's cut of that, of those taxes or the city's cut?
17:47Well, it changes over time, Jay, because the, the, the PFZ that the council talked about today, approved today,
17:54grows incrementally over 30 years.
17:56So in the first year, it's not going to be, it's not going to be a lot, but, but over 30 years incrementally, it'll grow.
18:03So it changes over time.
18:05The, the hotel occupancy tax that we collect is, is pretty steady.
18:08I mean, it, it, it took a severe decline during COVID, but it has come back.
18:13Um, we're about a hundred, uh, 105, $110 million a year, pretty consistent in terms of the local hot, uh, hotel occupancy tax.
18:22Um, so it, it'll change over the 30 year period.
18:25Is the local one bigger than the, the state's cut?
18:28Right now, yes.
18:29And then, when you were talking about team revenues as that fifth part of your multi-prong approach there, can you give some examples of what that might look like?
18:37I, I, I took it as kind of the mission style where you have the ticket fee and the, the lease payments from the, the team.
18:43Is there any, anything else?
18:44You've been hanging around city hall too long.
18:46I, yeah.
18:47I should be asking you the questions.
18:48I mean, is there.
18:49That's what we're talking about.
18:50Is it naming rights as well?
18:51Yeah.
18:52Or is that not included?
18:53Oh, we have, I mean, we haven't talked about naming rights.
18:55Okay.
18:56But yeah, but exactly what you're, what you're referring to.
18:59Leases, uh, ticket fees, that type of stuff.
19:02Leases, say beyond the arena?
19:04Well, yeah, because that's part of the, the, the, there's, there, there, if there's a private development that occurs there, then those would be, those would be, and we would anticipate those would be leases to the city for the use of that property.
19:19Okay.
19:20All right.
19:22All right.
19:23Rock and roll.
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