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Spirited Debate regarding aces refinancing

- Wow what a finale to a long spirited debate on whether the council should move forward in seeking money to fill a gap involving the refinancing deal for the Reno Aces.

The agenda item began with a comment period where Basin Street Properties mentioned they are days away from financing a $25,000,000 hotel next to their Jones Vargas Tower across from the ballpark, and that the Reno Aces have been a huge asset to his tower and the tenants inside.

Then two car rental companies came forward saying they were against the car rental tax increase, and then essentially called out by Jessica and Dave, saying they are possibly violating state law by charging local residents the extra car rental tax fee at the airport. Was an interesting little twist in the conversation!

Then, a convincing presentation by Jerry Katzoff on why the Reno Aces should receive the refinancing deal. All of his points were valid, including an estimated $25,000,000 impact to the local economy via a University of Nevada Reno impact study report. Another reason of course,e they are Triple AAA champions!

After a few more comments against the deal, it went back to council.

Sferrazza and Dortch then quite candidly pointed out the situation the city's parks are in and a $25,000,000 shortfall in public works repair, and then pointed out that the city is currently not in default in the current agreement with SK Baseball as it stands. Dortch also pointed out that the new city council can essentially null any agreement the current city makes. He also pointed out that Herb Simon personally backed the deal, and if he takes the Aces from Reno prematurely prior to the 15 year agreement, the city gets the stadium debt free. Zadra then asked 'where is the money going to come from?'

Hascheff then went to state very good points as to why to take the deal, because of additional benefits to the city with the new deal, including not defaulting on the fire station loan.

Zadra pointed out other people have come forward for help, including Summit Sierra Mall, and the city didn't help them. And that Tessera and Silver Legacy didn't come forward and ask for help from the general fund. Ouch it's take no prisoners tonight!

Some more memorable quotes from the discussion:

Dortch: "To commit our general funds, I just can't go there."

Gustin: "We close this down, we put 738 people out of work."

Mayor: "Why in the world would you ever want to turn your back on your partner or someone like Herb Simon or Katzoff. We need to honor our commitment to baseball"

Sferrazza: "At what point do we say, we just can't do it? (to Hascheff) You can't compare committing general funds to fix Moana fields, a public park, to something where you charge admission."

Sferrazza pointed out that in the completely hemorrhaged state the RDA is in, only bringing in $400,000 in tax increment and owing five times that in bond payments, it could conceivably be until the year 2020 when the RDA could finally afford to pay the Reno Aces their first $1.2 million annual tax payment owed to them under the current deal, and questioned where this money would come from for the new deal.

She also pointed out that in 2009, Sk Baseball came to the City Council with essentially the same argument in order to receive additional tax increment financing to build out the Freighthouse portion of the stadium, and that if they are breaking that agreement now, what's to stop them from approaching a future city council threatening to once again leave if more asisstance isn't given, particularly when this new refinancing deal stretches the commitment of both parties over a period of 30 years? And will the Aces really stay here another 30 years? Is there a precendent for that with other teams in the AAA league? What's the longest any AAA team has stayed at any one city? I don't know enough about baseball to answer those questions.

After some more discussion, and convincing 'for' speeches by Gustin and Aiazzi, ultimately Sferrazza, Zadra, Dortch voted 'no', and the Mayor via phone, Aiazzi, Hascheff and Gustin voted 'yes' to move forward with exploring the refinancing deal. Now they have to find the $150,000 to fill the gap between the fire station loan forbearance agreement that was coming out of the general fund, and iron out details in the contract before the final decision on Nov 6 or 7 (I think it was the 7th.)

No one seemed to compare the point that paying $1 million a year for 30 years is a lot different than paying $750,000 a year until we pay off a $3.2 million fire loan remaining. However, the $30 million SK Baseball wants from the city is in some ways 'cancelled out' by the fact the Reno Aces will pay $1 million a year for the land lease over the course of 30 years, instead of the current $1 a year agreement, and in the end, the city would own the stadium. In the original deal, the developers would own the stadium at the conclusion of the agreement.

To me the most interesting part about all of this is, the new incoming city council can essentially say no to the appropriation, and nullify everything that the current city council talked about. Dortch and Sferrazza repeatedly brought this point up, and Jessica mentioned that according to an article in RGJ, 6/7ths of the current city council candidates weren't for the deal. So, it will be interesting to see what happens down the line for sure.

In the meantime, city staff will now look for the gap in what the Reno Aces are asking for.

 

 

Comments:

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Posted by: Nettie - 10/24/2012 10:15:47 PM
Excellent summation, Mike!

Posted by: Ted - 10/24/2012 11:56:21 PM
(For those who do not want to read the whole thing: There are only two options without a new deal 1) Aces pay for the Stadium and they own it, or 2) The Aces pay for the stadium and WE own it. That is why I am against any deal at this time. Read bellow for more info.) I would first like to say that I really appreciate Mr. Duggan's coverage of this issue. He hits on a number of great points in this article and I hope he continues to deliver more details as the events unfold. I would just like to fill in some of the details of what happened at the meeting that I found enlightening. 1. I was the only member of the general public present at the meeting to make public comment in opposition to the proposal. The only other public comment made in opposition was delivered by representatives of the Airport Rental Car Companies. Mr. Aiazzi made sure to clarify with each of these representatives that they were only speaking out against the proposed 2% rental car tax increase. Their confirmation left my public comment as the only one that stood in opposition to the proposal to use money from the general fund for baseball. 2. The Aces are under contract to be in Reno for the next 10 years. All the talk about Simon moving the team is ridiculous. If he did, he would have to pay off the stadium debt and it would become the property of the city free and clear. If we do not sign the deal, the Aces can either a) pay for the stadium, play for ten more years, and then own the stadium, or b) pay for the stadium, move the team to a new city, and then we own the stadium. I'm no billionaire, but I have to think that is a no-brainer. 3. As it stands, the City is not in default or in breach of contract. We are current on the $750,000 yearly payments for the Fire Station Loans. We still owe $3.9 Million, but if we take this new deal, and pay $1 Mil for ten years, the debt will be forgiven. So either way, the Aces will be here for the next ten years as we see in item 1, why would we pay $10 million to keep them here when we could just pay $3.9 Mil? 4. When Council members in opposition suggested the vote should be left to the next council, Mr Aiazzi pointed out that none of the candidates for Reno City Council were present and suggested that meant they did not really care. Never mind that if this current Council says yes to this proposal, nothing really happens. The money would not be allocated until the next fiscal year, which would require approval by the next City Council for the new budget. 5. This City Council is only saying ‘yes’ to what the agreement is. The same City Council that approved the first deal that went bust, is now seeking the power to approve the correction. Those in favor of a restructure were passionate about their commitment to… their partnership with Aces Management. I heard it from multiple Council members that they were committed to the partnership with the Aces. I was left wondering, who was committed to the residence of this town. Here is my analysis: The Aces are not going anywhere for the next 10 years. The taxpayers are in a very good position right now to bargain and the Aces know it. Getting a deal done with this Council, where they have impassioned support, makes sense for the Aces. This Council, more than any other, is likely to give them the best deal. I do not want to see the Aces go anywhere. I want them to be here for the next 30 years and be successful on the field and in the community. Right now, we have a chance to dictate the terms of this agreement and I am afraid that if we move to swiftly we could lose that opportunity. An informed public must come forward and let our elected officials know that we will not stand for use of general funds to pay for this stadium. We do not have to use General Tax funds to keep the Aces in town. We may want to look at helping them out in one way or another, but not with General Fund money. We need to get creative to find solutions that meet everyone’s needs, but not at the expense of basic services. Remember a ‘no’ vote now only means we take more time to look at what is in our best interest. Two more things and then I am done: 1. There is nothing worse than empty threats. I do not think we should be the type of City that stands for being told that we have to pay up or you’ll leave, and fail to mention that if you do, we get the stadium for free. Over and over I heard how impressive this stadium is. It is hosting the 2013 All-star game. Any AAA team would be lucky to have a stadium like this. Either the Aces can pay for the Stadium and Own it, or unless a new deal is done, the Aces can pay for the stadium and WE own it. 2. City Council members read these comments. They mentioned several times the overall sentiments of this message board. Please do not stop participating, come to the meeting and let your voice be heard. Council Members in opposition will need your support on November 7th.

Posted by: wiley_n_reno - 11/15/2012 9:24:09 AM
The new city council just said NO to this deal. So it's still up in the air. Would ne nice to hear Herb Simon's side. What exactly does he ever want to risk? The Aces home attendance has been above the so-called "break even point".

 

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