SAN ANTONIO – The San Antonio City Council will make a key choice Thursday that will determine how plans for a downtown Spurs arena move ahead.
Will they approve a set of nonbinding terms and confirm the shape of a funding deal before voters go to the polls in November, or will they hold off on making a decision until they can get more information and community feedback?
City staff and Spurs officials have hammered out a deal for funding a $1.3 billion arena in Hemisfair, at the site of the former Institute of Texan Cultures Building. The new arena is a key part of Project Marvel, the city’s larger plans for a sports and entertainment district.
The nonbinding terms, which would serve as the framework for future contracts, 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.
(See the full term sheet at the end of this article)
The estimated $60 million it would take for the city to acquire the ITC site from the University of Texas System would be a separate cost.
The team 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 pay for its share of the arena with bonds, which it would repay using lease revenue from the arena and the ground under new development, hotel-related state taxes through a special tax-capture zone, and property tax from the new development within a tax increment reinvestment zone (TIRZ).
Dueling resolutions
Council members who want to approve the terms say voters need to have the full picture before they head to the polls in November and are asked about the county’s $311 million share.
The larger funding deal is contingent on county voters agreeing to use the county venue tax — a combination of taxes on hotel stays and car rentals — for the arena, while also raising the hotel portion.
“This about transparency, get all the information to the San Antonio residents so that they can make the decision,” District 10 Councilman Marc Whyte said Monday.
“Unless the citizens say yes in November to the county portion, this arena is not moving forward. So effectively, that will make the decision for everybody."
Mayor Gina Ortiz Jones, though, wants the city to pump the brakes.
On Sunday night, she asked City Manager Erik Walsh to add a resolution onto Thursday’s agenda that would keep the council from considering any terms until after the city had received an economic impact report by a firm unaffiliated with the team and each council district has held two community feedback meetings.
Jones has pointed out that the city’s consultant, CSL International, did not actually examine the possible benefits of the arena. The work was done by a consultant hired by the Spurs, Stone Planning.
CSL is also owned through another company, Legends, by Sixth Street, an investment firm that also owns a minority stake in the Spurs.
“I want deal with the Spurs. We all want this, right? I think it’s important though that our folks feel comfortable with the data and the numbers that are being presented, which is why the independent study is important, and our voters want to be heard on this,” Jones told KSAT during a live Q&A Tuesday night.
The same night, five council members asked for a vote on the term sheet to be added to Thursday’s agenda: Councilwoman Sukh Kaur (D1), Councilwoman Phyllis Viagran (D3), Councilman Edward Mungia (D4), Councilwoman Marina Alderete Gavito (D7) and Whyte.
Either resolution would take six votes to pass.
Supporters
Jones has dodged questions on whether she has the necessary support among council members, but she was in the clear minority when she first tried to pause talks at an Aug. 6 meeting.
Asked Wednesday if she was trying to turn up the pressure because she’d been unable to win over council members, Jones said “This is about the people. This is a conversation.”
“There is no reason to vote on Thursday. Why vote on term sheet that you have not brought to your people for feedback?" she said.
Community groups critical of Project Marvel have rallied behind Jones, including COPS Metro, which opposes using public funding for private development.
“We believe that the mayor has aligned herself with one of the most important things that we’re finding out when we discuss ... all of this with people, and that is they want these things: transparency and participation in the process. And we’re trying to fulfill that, and the mayor is right on line with that,” said COPS/Metro Leader Father Jimmy David Drennan.
Asked what would happen if the mayor eventually decided there was a deal good enough to warrant public investment, Drennan said, “We will cross that bridge when we get there.”
Meanwhile, the city’s business community is backing an arena deal, even holding a news conference in front of City Hall on Wednesday, which Jones crashed.
“The cost of indecision will delay projects, lose projects and drive up costs,” said Greater San Antonio Chamber of Commerce President and CEO Jeff Webster. “We believe now is the time to move forward, be focused with details, but it now is the time for San Antonio."
Term Sheet
The draft of the nonbinding 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.”
Read the full proposed term sheet below: