SAN ANTONIO – The City of San Antonio is hoping to score a possible funding source for a downtown NBA arena this week.
However, several lingering questions remain about the full plan to pay for a new home for the San Antonio Spurs at Hemisfair, which is estimated to cost as much as $1.5 billion.
PFZ for the NBA
City council members are scheduled to vote Thursday morning on the creation of a new “Project Finance Zone,” or PFZ.
The council members’ meeting will be streamed at approximately 9 a.m. Thursday in this article and on KSAT Plus. Delays are possible; if there is not a livestream available, check back at a later time.
This special zone would allow the city to collect a portion of hotel-related state tax dollars within three miles of a “qualified project” over the course of 30 years to help pay for the arena.
The city first created a PFZ in December 2023 to help fund improvements to the Henry B. González Convention Center and the Alamodome. However, Thursday’s action would replace it with a new zone around a “Convention Center Complex” that would also include a new arena.
City officials said the change gives them flexibility on time requirements to start the projects.
The amount of money the new zone would bring in depends on how state revenues from hotel occupancy tax, mixed beverage taxes and sales tax in the PFZ grow over time.
The amount collected during the year the zone is established becomes its base level. Any revenue collected above that in future years will be set aside to help fund the specific projects.
The state comptroller’s office previously estimated a PFZ around the convention center would bring in nearly $2.5 billion over 30 years. City finance staff said they’re working on an updated projection, though they expect their more conservative forecast would come in under that amount.
The city also expects to spread the money around between the convention center, Alamodome and the new Spurs arena. The money would also only trickle in at first before growing over time, which city staff said makes it unsuitable to make early debt payments on an arena’s construction.
Five-part funding lineup
The city’s larger vision for funding a new arena revolves around five possible streams of public and private dollars:
PFZ: The zone described above, which gives the city a cut of hotel-associated tax dollars that would otherwise go to state coffers.
An actual funding framework laying out how much each revenue stream would contribute still hasn’t been nailed down. The city, county and team signed onto a non-binding memorandum of understanding (MOU) in April. The agreed-upon MOU states the three entities would try to work out a funding plan by July.
The MOU also states the funding plan would avoid using property taxes for the arena, outside of TIRZ-related money, or any general fund dollars from the city or county.
Earlier this week, City Manager Erik Walsh told reporters that he intends to make a public presentation to council members about the funding framework within the next month.
Could the Spurs want a simpler formula?
Despite the city’s multi-pronged view of public financing approaches, Spurs executives seem partial to a familiar formula.
According to the San Antonio Report, Spurs Managing Partner Peter J. Holt discussed arena funding during a panel discussion last week.
“The model for our arena today is a public-private partnership, where the Spurs put in money and the public puts in money with Bexar County that is 100% funded by the venue tax,” the online publication quoted Holt as saying. “We are not looking to disrupt that model, we are not looking to add a new tax to San Antonio citizens.”
Spurs to get scraps in county tax
The county’s venue tax on hotel stays and car rentals may have done the heavy lifting for the Frost Bank Center’s construction, but county officials said the team won’t get first bite at the apple this time around.
County staff said the county has $397 million of capacity for new projects at the current tax rate. If voters agreed to raise the hotel portion of the tax, the capacity could grow to $448 million.
But Bexar County Judge Peter Sakai said the county has more pressing uses for that money, namely paying to keep up county facilities, such as the Spurs’ current home, the Freeman Coliseum and grounds and possible developments in the surrounding East Side area.
“And then by process of deduction we will see what amount of money, if any, the county will make available to a possible new Spurs arena,” Sakai told KSAT.
Any use of the tax would require voter approval.
Shot clock on funding
To get the venue tax onto the November ballot, the county needs to send off its proposed use of the tax to the state comptroller’s office for approval by July 8.
If the county does that, Sakai said it will be because it also knows how the tax would fit into the larger funding framework.
Right now, Sakai said the county hasn’t even gotten the cost of the arena.
“Obviously, the county is not dragging. It’s up to the City of San Antonio and the San Antonio Spurs to fill in the blanks, so to speak,” Sakai said.
“You’ll need to talk to the City of San Antonio, understanding we’re in the middle of a mayoral and city council runoff race. So, we probably can’t get clarity within this really expedited timeline.”
Four council races and the mayor’s seat are still up for grabs in the June 7 runoff.
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