Wednesday, November 17, 2010

Ricketts Try to STIF Us

No one up here will make any money off this. It's all for the benefit of the public!If you haven't heard, the Cubs are trying to get public financing for the rehab of Wrigley Field. The method by which they want to get the financing paid for is slightly confusing, so let's see if it can be explained.

Tickets to Cubs games (and Sox, Bears, Bulls, Black Hawks and Bears, too) are subject to a special sales tax called an Amusement Tax. This adds 12% to the cost of a ticket. These taxes, when collected, go to the general funds of the City of Chicago and the State of Illinois. Once there, they pay for salaries of municipal workers, roads, schools, and every other expense a municipal or state government can think up.

What the Cubs have asked for is this: To have the state issue $200 million in bonds with the repayment coming from the amusement tax specifically on Cubs ticket sales. Now, the Cubs know that the city and state already have uses for that money. They have thus proposed that the city and state keep the exact amount the collect today and that the bonds be repaid only by the increase in Cubs amusement tax collected over the next 35 years.

In other words, if the Cubs sell a ticket in 2010 for $100, the amusement tax is $12. If in 2011, that same ticket goes for $110, the amusement tax would rise to $13.20. Of that $13.20, $12 would still go to the general funds and $1.20 would go to the bonds being issued.

This plan is very similar to a real estate development program called Tax Increment Financing or TIF financing. Since this is a sales tax increment financing package, let’s call it a STIF.

There are so many problems with this proposal from a taxpayer perspective that it makes the proposal ludicrous. These include:

1) The proposal assumes that sales tax revenues are going to continue to go up. What happens if the Cubs start having attendance problems and ticket prices can’t continue to rise? Where does the shortfall for the bond payment come from then?

2) Why should the city and state kick in the growth from the taxes? It’s not like the cost for services won’t go up. If the taxes project to generate $1 million in new money for the state and the state needs the money, but the money id dedicated to pay Wrigley Bonds, then the state has to raise other taxes to cover the needs.

3) If the cost to pay for the bonds is coming through ticket prices, why does it have to be the tax part of the ticket price? Why can’t the Cubs just raise prices and dedicate the increase to pay for private bonds in a private placement transaction? Sure, the interest cost for that would be higher than state-backed bonds, but so what. Every company would like to borrow at the lowest possible rate. Do the Ricketts think that every private company should borrow from the state and not from commercial banks? How socialist is that!

4) It’s irrelevant that the Sox and Bears got public money. Beyond that neither of those projects should ever have happened, that was then and this is now. There is far less public money today than there was when either of those buildings were financed.

The Ricketts already hornswaggled the people of Arizona and got them to sell public lands to benefit the Ricketts family’s personal wealth (instead of selling the land to benefit all the taxpayers). They bought the team for about $200 million less than they probably initially planned. Take that savings and spend it on your stadium. Put your STIF away and try something else.

"They bought the team for about $200 million less than they probably initially planned. Take that savings and spend it on your stadium. Put your STIF away and try something else."

It's not your money and they are spending 200 million of their own coin on it.
They are planning on spending $200,000,000 of their money (or maybe Daddy's money) on the Triangle Building and other neighborhood improvements. They want the amusement tax money to pay for the stadium improvements.
Taxes aren't my money? That could only be Stew who would say something so asinine.

Did you hear your mom calling telling you that you have to go home?
Screw this team!
The Cubs pitching is so average compared to the post season teams. We are years away from building a WS team. Until we unload the burden of some major contracts we are not in a position to compete at the highest levels. While we have a few young prospects, our team lacks young affordable depth ala the Reds.

I do not see Jim Hendry lasting too much longer. His FA spending has been haphazard at best.
No, all those bad contracts are John McDonough's fault! No, wait! It was the managers' fault. Dusty and Lou held a gun to his head and forced him to sign guys like Neifi, trade for Juan Pierre and sign Milton Bradley.
The Ricketts didn't hornswaggle anyone. Voters actually, you know, VOTED to fund the new stadium / complex. Calling they ignorant is one thing, insinuating that the Rickett's tricked them is another.
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