SAN ANTONIO – The San Antonio City Council has approved a funding deal for a $1.3 billion Spurs arena after shooting down the mayor’s request to pump the brakes.
At a six-hour meeting on Thursday packed with business leaders, community groups, Spurs officials and even Spurs legend Sean Elliott, city council members voted down Mayor Gina Ortiz Jones’ proposal 4-7 without any discussion, apart from the mayor’s own comments.
The group then spent an hour and a half discussing the terms before passing them 7-4 along the same split.
“We’ve done this speech three times. We can agree to disagree. You either trust this team sitting in front of me with the City of San Antonio. You trust the Spurs, or you don’t. I trust the Spurs,” said Councilwoman Phyllis Viagran (D3).
The terms were negotiated by city staff and Spurs officials. Though they are non-binding, they will serve as the framework for future contracts.
Jones had asked to hold off considering a funding deal until the city had received an “independent” economic impact report and held two community feedback meetings in each district.
Leo Castillo-Anguiano (D2), Teri Castillo (D5), and Ric Galvan (D6) voted with the mayor in requesting a pause and then against approving the terms.
Sukh Kaur (D1), Viagran, Edward Mungia (D4), Marina Alderete Gavito (D7), Ivalis Meza Gonzalez (D8), Misty Spears (D9) and Marc Whyte (D10) voted in the majority against her pause and for the terms.
Terms
The proposed NBA arena at the site of the former Institute of Texan Cultures Building in Hemisfair is a key part of Project Marvel, the city’s plan for a wider sports and entertainment district.
The funding deal includes the city kicking in up to $489 million for the arena and Bexar County up to another $311 million. The Spurs would contribute at least $500 million, plus any cost overruns.
The Spurs would also guarantee $1.4 billion of nearby development over a 12-year period, including offices, retail, housing and a boutique hotel for visiting teams.
The city would front its share of the cost by taking out bonds, which it would then pay the debt down using revenue from the Spurs leasing the arena, ground leases under the new development and special tax capture zones for property tax and hotel-related state taxes.
(See the full term sheet at the end of this article.)
What’s next
A vote on the county’s share of the funding through its venue tax on hotel stays and car rentals is already on the Nov. 4 ballot.
The overall funding deal is contingent upon voters passing the measure, which includes an increase to the hotel portion of the tax.
“So when you go to vote November, you’re voting on the Spurs arena and we’re excited about the possible momentum around that,” Spurs Sports & Entertainment Chairman Peter J. Holt told reporters after the meeting.
Jones told a reporter she would “have to get back to (them)” on whether she planned to support the county ballot measure.
But the mayor plans to also push to put the city’s portion of the funding on the ballot as a bond election, which she could happen in May or November of 2026.
However, that would require support from the council that just voted down her plan for a pause.
“Look, when you’re fighting for the people, and when you’re working to give the people a voice, you feel good, right? And the outcome is the outcome," she said after Thursday’s vote.
Push to pause
Jones had been pushing for the past two weeks to pump the brakes on a funding deal with a “strategic pause.”
After adding the vote to the meeting agenda Sunday night, she turned up the pressure on her fellow council members through a press conference, social media posts, a blitz of media interviews and even crashing a rally by supporters of a deal.
“I feel very strongly about this because I want us to be successful,” Jones said during the meeting. “I want our community to revitalize our downtown. I want to make sure the Spurs stay in San Antonio for as long as possible. I do want to make sure — and I think that is best accomplished when folks have feel like they have all of the data and feel like they have been brought into the process."
The current economic impact study on the arena was done by a consultant hired by the Spurs, Stone Planning. It estimates there will be $318 million more in net spending in a year within the city and $333 million countywide tied to a new Spurs arena and ongoing operations at the Frost Bank Center.
The city’s consultant, CSL International, only reviewed the summary findings of Stone Planning’s report and did not conduct its own analysis. CSL is also owned through another company, Legends, by Sixth Street, an investment firm that also owns a minority stake in the Spurs.
Public comment
More than 100 people signed up to speak on Thursday, and a standing room crowd frequently broke into applause in support of the parade of speakers from their respective sides.
The business community and others supporting the terms say it’s a good deal that doesn’t rely on the city’s regular budget and the time is ripe to approve it.
“To use a basketball term, we have to shoot our shot. And you got to shoot the score, folks. And San Antonio stands to score big over the next 30 years and beyond,” said Metro San Antonio Chamber of Commerce President and CEO Brett Finley.
Critics of the deal questioned the use of public dollars and the amount of time the plans and information had been public.
“We’re hearing a lot about how there’s been a lot of transparency,” said Chance Moreno during public comment. “Then why have parties been signing non-disclosure agreements and been conducting these meetings in back-door rooms away from the public comment, away from public scrutiny?"
Castillo-Anguiano, who is representing the East Side district where the Frost Bank Center is located while Jalen McKee-Rodriguez is on paternity leave, said his residents don’t want the Spurs deal.
He also said by his tally, the majority of public speakers wanted them to vote “no.”
“The folks who are asking us to vote ‘yes’ on this term sheet, majority were all wearing fancy business suits, are CEOs, presidents or had big-paying jobs,” Leo Castillo-Anguiano said. “On the other hand, the folks who are asking us to vote ‘no’ on this term sheet are majority working-class folks who are probably missing work just to be here. And I think that speaks volumes."
‘Coward’
Holt told Jones near the beginning of Thursday’s meeting that he believed there is “tremendous data” and “tremendous opportunity” for an awareness campaign ahead of a November vote.
When Jones pressed Holt to answer “yes or no” whether the Spurs opposed the city holding off, Holt stuck to similar talking points.
While there was loud applause, voices from the crowd also called out “answer the question” and “you’re a coward.”
Term sheet
The draft of the non-binding term sheet on Thursday’s agenda includes:
- TOTAL COST: Approximately $1.3 billion
- SIZE: 17,000 to 18,500 capacity
- OPEN BY: 2032-2033 NBA season
- SPURS CONTRIBUTION: At least $500 million, plus any costs in excess of city and county contributions
- CITY OF SAN ANTONIO CONTRIBUTION: Up to $489 million or 38% of the arena cost, whichever is less, financed through Spurs lease of the arena, ground leases by developers and tax capture zones for local property tax and hotel-related state taxes
- BEXAR COUNTY CONTRIBUTION: Up to $311 million or 25% of the cost, whichever is lower, from the venue tax, subject to voter approval
- 30-YEAR LEASE: Spurs to pay $4 million in rent (increasing 2% every year), and includes a non-relocation agreement for the term of the lease
- SITE PURCHASE: The city would buy the site of the former Institute of Texan Cultures building from the University of Texas System, which it has previously estimated would cost $60 million
- HOME-AWAY-FROM-HOME GAMES: “Spurs will have the ability to play home games at international sites and other neutral sites as required by NBA rules and regulations and up to four home games outside the Arena but in the Spurs’ home territory (which may include the Alamodome).”
- NEW DEVELOPMENT: Spurs and private developers to create $1.4 billion of new development over 12 years, including housing, hotel, retail and offices
- COMMUNITY BENEFITS: Spurs to pay $2.5 million annually for a total of $75 million throughout the 30-year lease, with funding allocated by city council
- ENTRY CITY WAGE: Full-time employees at the arena would be paid at least the city’s entry wage
- COVERING FEDERAL PROPERTY PURCHASE: The Spurs will pay up to $30 million to help the city buy federal property near the arena site
- NO REVENUE SHARING: Jones has asked about revenue sharing, but Spurs officials have said they aren’t open to it under the current structure
- MID-LEASE RENOVATION REQUIRED: Future binding deals will include obligations to renovate the arena between the 13th and 15th year of operations, “subject to the Parties’ agreeing on a funding mechanism.”
Spurs statement
Holt released the following statement on Thursday after the votes:
“Today’s vote is an important step forward for San Antonio. I want to thank the members of City Council, the City staff and County for their leadership, diligence and collaboration in helping us reach this point.
“This project is about more than an arena. It’s about pride in who we are as a city and belief in what San Antonio can become. The Spurs are investing over $2 billion because we believe in San Antonio’s future. That includes a $500 million direct contribution toward the arena, covering 100% of cost overruns, guaranteeing $1.4 billion in private development and $75 million in community benefits. There will be no impact on local residents’ taxes and no money diverted from the city’s general fund.
“This will be a true public-private partnership. The arena will be publicly owned, funded by visitors, and built to revitalize our downtown, create jobs and give future generations a place to celebrate together.
“Now, the next step belongs to the people of Bexar County. On November 4, voters will have the opportunity to decide on this project, and we are hopeful they will join us in saying yes to the future of our city.”