Time to Review the Fine Print in Cubs Memo of Understanding – Again

One of the key elements in determining the economic viability any sort of real estate development is the initial cost of the project. This, in turn, is weighed against the expected return on this investment. In the case of the proposed Chicago Cubs spring training facility, the number repeatedly mentioned in the press as the maximum public investment is $84 million. While the $84 million figure is mentioned in the Memorandum of Understanding signed back in January by the City of Mesa and the Cubs, it does not represent the entire public investment.

Disregarding any expenses for operating cost or future improvements, the initial cost of the project is not capped at $84 million. The $84 million number is referred to in the memo as the “Financing Amount”. Specifically, as enumerated in Paragraph 2.1, subsections (a) through (l), there are additional costs, over and above the $84 million, which must be paid by the city. The most significant of these costs are all infrastructure related to the facilities and the primary stadium parking. To give these elements some perspective, the City of Glendale spent $37 million on infrastructure costs related to the recently completed White Sox and Dodgers Stadium. Now, the cost has risen to $120 million or so. Since the city does not have the money lying around, add the cost of financing for 25 or 30 years and you quickly have a $200 million development.