Moderated by Rick Badie
A recent statewide poll conducted by the AJC showed 72 percent of respondents either opposed or strongly opposed using hotel/motel tax collections in Atlanta and unincorporated Fulton County to help finance construction of a new Falcons stadium. Today, a guest writer says opponents of using that revenue to help fund the venue misunderstand the tax’s purpose. A businessman suggests, as an option, courting a “backup tenant” for the Georgia Dome.
Tax designed to create economic benefits
By Mike Hassinger
Polls show Georgians and Atlantans don’t like it. Georgia Common Cause opposes it, as does the tea party and several people I know. They’re all wrong on this deal to replace the Georgia Dome with a new stadium.
The Georgia World Congress Center Authority has the legal power to issue bonds (about $200 million worth) to fund things related to the GWCC Georgia World Congress Center campus, which includes the Congress Center, Centennial Olympic Park and Georgia Dome. The authority’s job is to bring convention, sports and entertainment events to downtown Atlanta. It’s been doing that since 1976, when the Congress Center hosted the Bobbin Convention.
The Legislature puts state dollars into projects on or near the campus, sometimes for direct purchases of land, sometimes for improvements, sometimes for parking. The Dome was built to accommodate the demands of then-Falcons’ owner Rankin Smith. He wanted a bigger share of the parking and concession revenues than he was getting by sharing the old Atlanta-Fulton County stadium with the Braves. The Legislature and governor crafted a deal whereby the Legislature let the GWCC borrow $210 million to build the Dome, and let the city of Atlanta pay the borrowers back with revenue generated by a hotel-motel tax.
The only reason the hotel-motel tax exists is to pay back money borrowed to build and improve things at the GWCC campus. Since 1989, Georgia hasn’t put a bunch of direct “state tax” dollars into those facilities. It’s been revenue from Atlanta’s (and Fulton County’s) hotel-motel tax. That’s better than using taxes that all Georgians pay to create “economic benefit” for metro Atlanta.
How big is that economic benefit? Former Gov. Zell Miller claimed it was $10 billion. When Politifact staffers fact-checked him, did some of their own calculations and contacted Georgia State University economist Bruce Seaman, they came up with somewhere between $5 billion and $7.5 billion. Assuming the lowest possible number available, Atlanta and the surrounding area get a $5 billion boost in economic activity because we let the GWCC Authority borrow money to make the Congress Center “campus” attractive to sporting, convention and entertainment events — and then pay those bonds back with revenues from a hotel-motel tax, which is mostly levied on visitors. Yes, it’s a tax, and yes, it’s technically “public” money that could be used for something else — if Atlanta wanted to use it for something else.
As a means of paying back bondholders, levied only on those folks who choose to stay in a hotel in Atlanta and originally authorized only for the specific purpose of paying for improvements to the things the GWCC Authority owns and operates, it’s about as far from “tax money” as a revenue stream could be and still be called “public.”
I live in DeKalb County and have no reason to stay overnight in an Atlanta hotel. I’ll never be charged a dime of taxes to pay for this new stadium. Neither will most of the people in Georgia. We’ll all see more economic activity because of the conventions, trade shows, concerts and sporting events the venue attracts.
The facts are out there and have been since the beginning. Yes, there are lots of things Atlanta and the Legislature could spend $300 million on. None of those other things were the reason for the hotel-motel tax. The reason for that tax was to build the Dome. The Dome benefits Atlanta, the metro region and Georgia. And it creates jobs without raising taxes.
Isn’t that what we want the Legislature to do?
Mike Hassinger is a political consultant and editor at PeachPundit.com., where this article first appeared.
Pursue backup tenant for Dome
By Steve Berman
I love the Atlanta Falcons.
The best players, coaches, management and ownership in the league are right here. But as the playoffs and legislative session converge, I have to question how well the public interest is served by the Falcons and the Georgia World Congress Center Authority (GWCCA) collaborating to convince state leaders on the logic of public funding for a new stadium.
This troubling state of affairs became clear to me when I attended a Falcons home game this season and saw the Georgia Dome’s beautiful condition. When I commented to my friend that it was a pity to demolish something so relatively new and in such good shape, he echoed the undercurrent of speculation: If we don’t seal the deal with the Falcons with partial public funding of a new stadium, we’re inviting the team to move to NFL-deprived Los Angeles.
In commercial real estate, we call this a misalignment of interests. If the Falcons can move their team to L.A. — or elsewhere — if Georgia doesn’t invest more than a quarter-billion dollars of public money in a new stadium, then shouldn’t the landlord — the GWCCA — be actively discussing the potential Georgia Dome vacancy with other NFL owners? This is a time-worn business principle: Create as many viable options as possible. The mere availability of options, in turn, perfects the pricing of the product.
Has leadership of the GWCCA spoken, for example, with the ownership of the Jacksonville Jaguars, a team languishing financially in the country’s 40th largest city? (Atlanta is eighth.) The expression “one man’s junk is another man’s treasure” comes to mind in considering shopping the Georgia Dome to the Jacksonville Jaguars or the St. Louis Rams.
How much might we bet that the Jacksonville NFL ownership would jump at the chance to bring its football team to Atlanta to play in front of a sold-out crowd in a paid-for stadium? How much would we wager that if the GWCCA offered some NFL owner a $50 million check and a long-term, low-cost lease on a paid-off facility as nice as the Georgia Dome, we couldn’t find a quality football team to relocate here?
Even if we take the Falcons at their word that they’d prefer to stay downtown, the mere possibility that the Falcons’ owners could move the team creates leverage for the Falcons. As stewards of a public asset, the GWCCA should be expected to pursue the possibility of another NFL team relocating here, even if the best-case scenario is for the Falcons to stay.
In the process, it will save taxpayers hundreds of millions of dollars either in an aggressive, market-driven, fair deal with the Falcons or with some other NFL team. Lacking negotiating leverage will inevitably result in a bloated and perhaps unnecessary new facility paid in part with public dollars to accommodate the dreams of one business owner looking to maximize his investment.
The GWCCA owes it to Georgians to aggressively pursue a back-up tenant.
Steve Berman is the founder of Atlanta-based OA Development, which develops, manages and brokers and invests in commercial real estate properties.