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Stadium price tag causes stir
TEMPE, Arizona (The Arizona Republic Online) -- An accounting firm has confirmed it would cost Tempe and Mesa a hefty $122 million to prepare a joint site for an Arizona Cardinals football stadium.
The development would generate relatively little money - about $15.8 million in present dollars - for the two cities over the next 30 years, according to the $75,000 study released Tuesday by Ernst & Young.
Some Tempe and Mesa politicians were less than thrilled to learn the news.
"I'm not sure I'm excited about investing $122 million to get $15 million in 30 years," said Mesa Councilman Bill Jaffa, an accountant.
The report said the project actually would bring in about $354 million over the next three decades when you consider inflation. But to more accurately equate that to the costs, the company converted the revenues to the 2000 value, which is about $15.8 million.
Tempe councilmen Dennis Cahill and Ben Arredondo both said it would be a burden for Tempe even to come up with its half of the $122 million in costs.
"I don't want to see the Cardinals leave," Cahill said, "but it's way too much for Tempe to pay. We would need help."
With these kinds of costs, some council members say the Cardinals, the state or the county might have to put up more money. Or other cities could join in and form a stadium district.
The Tempe and Mesa city councils are meeting at 4 p.m. today at the Mesa council chambers to discuss the report together and to decide where to go from here. They'll have a chance to grill the consultants and learn more about the report and its numbers.
The report is the first detailed look at what any city would have to pay to host the proposed $331 million stadium, but it just addresses the specific 108-acre Tempe-Mesa site south of the Red Mountain Freeway and east of the Price Freeway. John F. Long has hired the same firm to evaluate the economics of a 13-acre stadium site he's offering.
Mesa Councilman Dennis Kavanaugh said it now appears that any city that hosts the stadium will need at least 100 acres and to spend at least $95 million preparing the site. That's 75 acres for the stadium and 25 acres for hotels, offices and other projects that could contribute lease-and-tax revenues so a city could recoup its costs.
The report says the cities would have to spend at least $122 million on parking lots, landscaping, moving buildings and other costs. Cash flows from the project would actually be a negative $22 million but because of other tax revenues and the value of the land, the cities are expected to come out about $15.8 million ahead - in present dollars.
Ernst & Young say there's a good chance that a stadium would attract and support about 1.3 million square feet of offices; 125,000 square feet of stores and restaurants; two limited-service hotels with 125 rooms each; one full-service hotel with 250 rooms; and 400 apartments.
But Mesa Mayor Keno Hawker said, "I have a little question believing three hotels will be built and that they will have the occupancy rates they (consultants) stated."
A finance major in college, Hawker also said he's not sure the cities can even sell bonds based on potential revenues so far into the future or how the bonds could be split between two cities.
"It could be hard to bond off the hotel that's going to be built in 2007," he said.
The biggest hurdle for the project is that Maricopa County voters first have to approve Proposition 302 on Nov. 7. It would raise $1.8 billion over 30 years to build the $331 million stadium, as well as spend money on Cactus League spring training and build sport and recreation fields for young people and amateurs. Most of the revenues would come from higher taxes on car rentals and hotel rooms, $85 million from the Cardinals and National Football League, and others.
"The site has a lot of possibilities," Arredondo said. "But everyone is wasting their time. We need to wait until after the election."
Kavanaugh said, "I still have some major questions about whether voters will approve the financing plan. But if you look at the location, I think it's the most suitable."
Another hurdle is that Tempe Mayor Neil Giuliano got angry last month and called the joint Tempe-Mesa deal off after learning Hawker had submitted a personal statement opposing the statement for the publicity pamphlet for the Nov. 7 election. Hawker opposes public funding for private sport ventures.
Even though he hadn't read the report, Giuliano remained optimistic Tuesday and noted the proposed site is within 30 minutes of 80 percent of the Valley's population.
"It's a strong site, but we expect to submit other sites within Tempe," Giuliano said.
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