City’s Claims for Cubs Training Impact Hard to Verify

Press reports are repeatedly filled with remarks made by City of Mesa officials (mostly the Mayor and City Manager), that the loss of the Chicago Cubs spring training would be an economic disaster for Mesa, Maricopa County and the State of Arizona in general. These statements are based on a couple of studies paid for by the city over the past year or so. While there are many exaggerated claims made in these studies, it is best to focus on these overly optimistic assertions one at time. Because the primary basis for all of the economic impact of the Cubs spring training revolves around attendance at Cubs contests played with other Cactus League teams, it seems logical to examine just how many people are drawn to these events.

The City Claim – If the Cubs were to leave Arizona, the Cactus League would suffer a loss of 345,000 attendees.

The Fact – The number used by the city (345,000) is greater than the total number of people who attended all of Chicago Cubs games played, both at home in Mesa and at other teams’stadiums as well. Beyond the simple impossibility involved here, it would also be true that not everyone going to a Cubs game is a Cubs fan since baseball does require two teams.

Mesa Looks at $200 Million Tab for Cubs Spring Training Complex

Taking a page out of the Glendale playbook, the City of Mesa is now facing the prospect of shelling out over $200 million for the privilege of building a new practice and stadium facility for the Chicago Cubs. How could that be when the city repeatedly says there is an $84 cap on public participation? Well, let’s start with the fact that the agreement between the Cubs and the city states that, in addition to the $84 million, the city is responsible for the entire cost of infrastructure and public parking. How much could that be? Glendale spent $37 million on infrastructure and still ran out of money to complete roadways and other improvements. Add in over $80 million in debt service over the planned 30-year bond period and you’ve got your total; unless, of course there are cost overruns.

Anyway, the City of Glendale said at the outset their stadium and practice fields would cost $81 million. One year into construction, the price had escalated up to $115 million and upon completion the total was over $150 million – plus interest since they borrowed all the money. This comparison is especially appropriate since the Glendale project is mentioned in the memorandum between Mesa and the Cubs as a development pattern they wish to follow.

City of Mesa Puts Focus on Red Mountain Site for Cubs Project

Sounding for all the world like a company denying the possibility of bankruptcy on the day before filing court papers for that very purpose, the City of Mesa has elevated the level of denials regarding the selection of a specific site for the proposed Chicago Cubs spring training facility. The official word is that there are many sites still in the running for this development. However, many residents at Red Mountain Ranch don’t seem to be buying that line. Perhaps this is because the mayor has repeatedly said there were only two sites in contention since January and Red Mountain was one of these. Also, the public statements by both the Cubs and the city that a particular location would be identified by the end of March has caused a loss of credibility to both the team and elected representatives.

In any case, the lack of any direct answer to questions by residents over a long period of time has only increased anxiety regarding the matter and has led many to conclude that the Thomas Road and Recker Road site in east Mesa has already been chosen. Time will tell.

More Misinformation on Cubs Spring Training Project

For the umpteenth time, or at least very close to that often, incorrect information has recently been spread to support the development of the proposed Chicago Cubs spring training facility slated to be built in the City of Mesa. On this occasion, the Arizona Republic published an editorial on June 12 with the heading “Stadium gamble is worth the risk.” Within the body of this piece was the statement, “If the Cubs leave Arizona and are replaced by a team with average attendance, the Valley still stands to lose nearly $138 million annually in economic activity.” This is not what the study commissioned by the city said and is incorrect on two counts. First, the number of $138 million referred to the statewide economic impact, not the Valley impact. Secondly, the $138 million amount was stated in the city’s study to be what would be lost if the Cubs were not replaced by any other team, not, as stated in the Republic, if they were replaced by a team with average attendance.

This is at least the fourth time this particular publication has made the same incorrect assertion, despite the fact anyone can go to the Mesa web site to read or copy the complete study. Apparently, practice does not make perfect at The Arizona Republic.

Unanswered Questions about Mesa Spring Training Project

The latest City of Mesa funding plan calls for selling 30-year bonds to build the new Chicago Cubs spring training facility. Money for the payments on this debt would primarily come from the incremental sale of farm land which Mesa owns in Pinal County. City officials claim this land is worth “at least $100 million”. That being the case, wouldn’t it make more sense to simply sell the land now and not be forced to pay interest on the bonded debt? The savings would be at least $72 million over the life of the bonds. The answer, of course, is that the land in Pinal County is not worth anywhere near $100 million and the city is fully aware of that fact.

With regard to the 30 years of payments on this project, obviously, one advantage to borrowing money over a longer period of time is a lower periodic payment on the debt. This is true on home mortgage loans and on municipal bonds. However, there are some drawbacks involved. The interest rate on a longer-term loan is higher than over a shorter borrowing period in both cases; mortgages and bonds. In the case of the Cubs facility there is another consideration – the agreement with the Cubs is only for 25 years with the provision that the Cubs can leave after 20 years by paying a penalty. Does it make sense to still be paying for this development in those years after the baseball team has moved on to greener pastures?

City of Mesa Plan Doomed by Facts

Like every other notion put forth since the beginning of this year, the very latest idea floated by the City of Mesa to finance the proposed Chicago Cubs spring training project is, economically speaking, a nonstarter. The most recent concept depends on selling 11,000 acres of city-owned irrigated farm land in Pinal County to make the payments on money borrowed to build the Cubs project. Press reports quote city officials as saying the land in question is worth at least $100 million, or about $9,000 per acre. Well, if the land is really worth that much, why not just sell it now and pay cash for the spring training complex, thereby saving the financing cost?

The answer, of course, is that the Pinal County land is not worth anywhere near $100 million. It is possible that the land was once worth that amount, but like other kinds of Arizona real estate, the average price paid for agricultural property has plummeted over the past few years. In fact, rural land prices in Pinal County peaked in 2005 and have since spiraled downward. Worse yet, not only are prices still falling but buyers are virtually nonexistent. However, for anyone wishing to purchase such property, there is an abundance for sale. Asking prices for irrigated farm land currently for sale in the vicinity of Mesa’s property range from $2,500 to $4,500 per acre. Not only is there no hope of raising sufficient funds to finance the spring training facility, there is a strong probably that the mandatory sale of this land would yield less than what was paid for this asset 25 years ago.

Mesa Plans to Borrow from Peter to Pay Paul

Looking at the press releases, the public has been led to believe that the City of Mesa has somehow miraculously found the resources to build a new Chicago Cubs spring training facility without the help of any state assistance. The miracle is in the form of thousands of acres of unneeded Pinal County land owned by Mesa which can now be sold off to service the debt which will be incurred to build this development. While the impression given is that this is new-found money, a closer examination shows this is not the case at all.

The Pinal County land in question has been listed for sale for over three years. At the time these parcels went on the market, the city issued a press release which stated, “The proceeds from the land sale have already been projected in the City’s budget forecasts.” In other words, whatever amounts could be anticipated from selling this asset was already allocated to some future expense. If the funds from land sales are now diverted to the Cubs project, some other means will have to be found to replace a budget revenue gap in years to come. This amounts to nothing more than “kicking the can down the road” and almost guarantees the need to cut additional essential services or raise taxes.

Economic Viability of Cubs Spring Training Project in Doubt

The latest pledge by the City of Mesa towards financing the Chicago Cubs spring training complex has virtually no chance of showing a return on the investment. Whereas the initial plan unveiled back in January stated that the State of Arizona would pick up at least one-half the cost of the development, the city has now committed to fund the entire public portion of this project in an effort to meet a July deadline regarding financing.

The primary way government agencies generate income as a result of business and development projects is through the receipt of taxes. Of all the money spent in connection with Cubs spring training activity only a portion is taxable and, of that total amount, just a small portion flows to cities. In the case of the new Cubs facility, most tax revenue would go to the state and county. Of the overall sales tax of 9.05% in Mesa, the city receives 1.75%. Also, keep in mind that money spent at away games in another jurisdiction will not benefit the City of Mesa. In the end, Mesa will get far less than $1 million per year in revenue from this enterprise while paying out many millions of dollars annually in bond debt service to pay off the stadium and practice fields.

New Mesa Spring Training Plan Involves Selling Assets

The latest City of Mesa funding idea for a new Chicago Cubs spring training complex relies primarily on the sale of land which the city acquired years ago in Pinal County. This idea basically puts Mesa in the same position as the City of Glendale regarding their spring training facility for the White Sox and Dodgers. In plain language, the city will sell bonds sufficient to build the new baseball development and hope the money shows up later. Of course, a concerned taxpayer might wonder, if the land over in Pinal County was not needed for the original intended purpose, why wasn’t it already on the market before now? And, if the land really is worth anywhere near $100 million, is the subsidy of out-of-state millionaires the best use of that money?

The other source of proposed funding for this project would come from an increase in the hotel tax from the current rate of 3% up to %5. City officials estimate this tax increase would generate an additional $1 million per year.

Spring Training Announcement Planned For Thursday

Officials at the City of Mesa have announced a press conference for 10:30 AM on June 3rd. The stated purpose of this meeting is to reveal a new funding plan for the Chicago Cubs spring training facility. Participants include the mayor, the city manager, Cactus League representatives and various business leaders within the community. Perhaps of significance is the mention of hotel executives to be present at this time.

Since this is the fourth or fifth financing plan to be publicly revealed, it is hard to tell whether it will be the last, but the clock is ticking toward the July 12 final agreement deadline stated in the memorandum of understanding signed back in January. Also, it is unclear whether the Cubs preferred development site at Red Mountain Ranch will finally be made official at this meeting.