SAN ANTONIO – The San Antonio City Council passed a new way to help fund a downtown stadium for the San Antonio Spurs using public dollars.
However, it is unclear what kind of role the new “Project Finance Zone” (PFZ) will play in the overall funding of an arena at Hemisfair, which could cost up to an estimated $1.5 billion.
The San Antonio City Council created the PFZ with a 9-0 vote at a Thursday council meeting. Councilwoman Phyllis Viagran (D3) and Councilman Manny Pelaez (D8) were not present for the vote.
This special zone allows the city to collect a portion of hotel-related state tax dollars within three miles of a “Convention Center Complex” over 30 years. The money, which would otherwise go to state coffers, could help fund improvements to the Henry B. González Convention Center, the Alamodome and a potential NBA arena.
The new PFZ replaces one that the city created in December 2023, shortly after the state legislature passed a bill adding San Antonio to the list of eligible cities. The original zone focused only on the convention center and Alamodome.
City officials said resetting and reformatting the PFZ gives them more flexibility on time requirements to start the projects. Officials now have five years to start on any of the three projects within the complex, rather than having to start on both the convention center and Alamodome.
City Manager Erik Walsh denied that the arena was added to the mix because of pressure from the Spurs.
The amount of money the PFZ would bring in for the city depends on how state revenues from hotel occupancy tax, mixed beverage taxes and sales tax tied to hotels in the PFZ grow over time.
The amount collected during the year the zone is established — 2025, in this case — becomes its base level. Any revenue collected above that in the next 30 years will be set aside to help fund the specific projects.
The state comptroller’s office previously estimated a PFZ around the convention center could bring in nearly $2.5 billion over 30 years. City staff are still working on an updated projection, but they expect their more conservative forecast will likely be closer to around $2 billion.
The money wouldn’t be just for the arena. Walsh said the convention center is the “first priority,” while the Alamodome improvements are “down the road.”
The money would also only trickle in at first before growing over time, which city staff said makes it unsuitable to make early debt payments on an arena’s construction.
Larger funding plan
The city’s larger vision for funding a new arena revolves around five possible streams of public and private dollars:
- PFZ: The zone described above, which gives the city a cut of hotel-associated tax dollars that would otherwise go to state coffers.
- Venue Tax: A Bexar County tax on hotel stays and car rentals that was used to fund the Spurs’ current home, the Frost Bank Center.
- Spurs: Private money from the team, which Forbes values at $3.84 billion.
- TIRZ: Similar to a PFZ, a “tax increment reinvestment zone (TIRZ)” sets aside new, city property tax revenue from development or higher values within a specific area. The money is then used to fund more projects within that same area. The proposed stadium sits within the city’s Hemisfair TIRZ.
- Team/Arena Revenues: Walsh said this could include ticket fees and leases related to the arena — not only of the stadium, but of related development nearby.
An actual funding framework laying out how much each revenue stream would contribute still hasn’t been nailed down. The city, county and team signed onto a non-binding memorandum of understanding (MOU) in April. The agreed-upon MOU states that the three entities would try to work out a funding plan by July.
The MOU also states the funding plan would avoid using property taxes for the arena, outside of TIRZ-related money, or any general fund dollars from the city or county.
Walsh has said he intends to make a public presentation to council members about the funding framework within the next month, though that would likely be an update rather than the final amount.
The talks are ongoing as the city prepares for a new council to take office next month after the June 7 runoff. At least five of the 11-member body, including the mayor, will be new.
Asked after Thursday’s vote whether he anticipated presenting the framework to the current council or the next, Walsh said it would likely be both.
“Well, part of that will rest on us getting the work done,” Walsh told reporters. “We’re relying upon some outside folks to do the economic impact analysis. Presumably, I would think probably both, right? Before and after. I don’t think it’s a kind of a one-and-done conversation. So, 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.”
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