SAN ANTONIO – One question remained above all others after Thursday’s unveiling of an entertainment district centered around Hemisfair and a new Spurs arena.
Who’s paying?
But there’s another question behind that one: Who should?
The funding plan for the arena and the wider district is unclear. At the moment, there is no official price tag for it all beyond an estimated “billions.”
City officials have thrown out numerous possibilities for private and public financing. Their Thursday presentation stated arena funding will require a contribution from the City of San Antonio, Bexar County, the $3.85 billion Spurs franchise and “other sources.”
However, San Antonio Assistant City Manager Lori Houston also promised council members: “We will not bring the arena to the voters. There will be no general taxpayer dollars going towards the arena."
It is unclear exactly what “general taxpayer” means. Geoffrey Propheter, an associate professor of public finance at the University of Colorado-Denver who watched and posted about the meeting online, said wordplay often arises when stadium funding is discussed.
“If government’s involved, taxpayers are involved, and you can’t get around that,” Propheter said. “The only way to get around that is to not be involved, to not have government involved, not use any taxpayer resources."
San Antonio officials' comments indicate a citywide vote on a large bond to build the stadium is likely off the table.
Bexar County has a venue tax that applies to hotel and car rentals. Tapping that for this project would also need a public vote, but it is not clear if the county is open to that possibility.
Two options Houston said the city is considering for the arena are tax incrementing financing and a project financing zone (PFZ).
The city has several Tax Increment Reinvestment Zones (TIRZ) established already, including one for the Hemisfair area. City council created a PFZ around the Henry B. Gonzales Convention Center and the Alamodome in December 2023.
Both tools work similarly: collecting a portion of the taxes in those areas that would otherwise go into local or state coffers and funneling the money back into developing the area.
City Manager Erik Walsh did not elaborate Thursday when KSAT asked why the city felt TIRZ or PFZ might be more palatable options for taxpayers, especially since using them for the project wouldn’t require a referendum vote.
Instead, Walsh said: “We’re going to work on an MOU (memorandum of understanding) with our partners and then develop funding options and alternatives.”
‘Bad idea’
While the Spurs' colors are black and silver, public funding for sports stadiums is closer to a black-and-white issue for economists.
“I think it’s a bad idea. It’s a poor rate of return on taxpayer dollars,” said Professor David Macpherson, the chairman of Trinity University’s Economics Department.
If the money is coming from an established revenue stream, Macpherson said, it “could be spent elsewhere. There’s always an opportunity cost.”
A 2022 survey of more than 130 studies over more than 30 years published in the Journal of Economic Surveys concluded, “nearly all empirical studies find little to no tangible impacts of sports teams and facilities on local activity, and the level of venue subsidies typically provided far exceeds any observed economic benefits.”
It’s a conclusion that can irritate a project’s supporters.
“There’s going to be a lot of journalists and a lot of naysayers out there that, you know, that trot out this tired narrative,” Councilman Manny Pelaez (D8) said during Thursday’s discussion.
Pelaez argued, in part, that a winning team like the Spurs coming to the city center “brings about an important resurgence of that downtown.”
The city’s plans for the district are broader than just a stadium. The vision that officials laid out Thursday included an expanded convention center, a 1,000-room convention center hotel, a land bridge spanning from Hemisfair to a “reimagined” Alamodome and a former federal courthouse renovated into a 5,000-seat event venue.
KSAT asked one of the 2022 survey’s co-authors, Professor Dennis Coates at the University of Maryland-Baltimore County, whether the arena’s inclusion in the wider district made it worth public funding.
“For me, it boils down to, ‘Can you do all of those other things?’” Coates said. “‘Could you build that land bridge without sinking money into an arena?’ I think you could. ‘Could you refurbish that courthouse into a concert venue without building an arena?’ I think you could. And so, what of these things are really necessary? What are the things that are sort of tacked on to kind of sell the package?”
City staff said each project is being developed on its own track and would be brought before the council piece-by-piece as feasibility and funding plans are completed.
No matter what the numbers are, there’s a question of preference in the equation, too, Propheter said. If someone loves the Spurs, the economic tradeoffs may not matter to them.
“A doctor can say to you, ‘Hey, you got high blood pressure. You might want to stop eating all that salt.’ You’re like, ‘Nah, salt’s delicious.’ Right?“ he quipped.
“You can make these same sort of conclusions. You can ignore the experts. That is all of our choices.”
Until the city, county and Spurs come back with details, it’s hard to say exactly what that choice is.
More coverage of San Antonio’s proposed sports and entertainment district on KSAT: