Reno City Council approves subsidy for billionaire baseball team owner
RENO - The City Council has given tentative approval to a plan to use general fund money to help owners of the Reno Aces baseball team refinance a $55 million loan used to build Aces Ballpark. ...The problem with government giving a subsidy to a billionaire isn't that the recipient is rich. The issue is that government shouldn't be giving anyone a subsidy.
The primary financial backer of the Reno Aces, billionaire Herb Simon, has said he would move the team elsewhere if a new public financing deal isn't cut to refinance the $55 million loan that will come due in December 2013.
Originally, the ballpark loan was going to be mortgaged by using assumed increases to downtown property taxes. Instead, that revenue collapsed during the recession as casino revenues declined.
Now the plan is to use general fund financing from Reno and potentially Washoe County and new private funding from the Aces owners, to issue new private debt to refinance the $55 million loan. That private debt will be guaranteed by Simon.
Washoe County is being asked to chip in $500,000 a year for the next 30 years. That vote is expected to happen in the coming weeks. The city also wants a guarantee the Aces will stay in Reno until the stadium debt is paid off 30 years from now.
If approved, the direct public contributions from Reno and Washoe County will amount to $45 million over 30 years. Once the stadium is paid off, it will become a publicly owned building.
Government's role is to provide an equal playing for individuals and businesses to compete on - not to pick the winners and losers in the economy.
In 2009, NPRI released a study detailing the problems with tax-increment financing schemes, like the one that backfired on Reno. Read the whole thing here.