Texas School District Blocks NBA Team's Arena Deal

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Bruce C. Bennett loves the San Antonio Spurs, his local professional-basketball team. He's also fond of children. He has two of his own, and is the president of their school board.

But when the 48,000-student North East school district in San Antonio was lobbied last fall to back a taxpayer-financed, $156 million arena for the Spurs, his priorities were clear. He denounced the arena as a bad deal for the schools, and championed the board's 5-2 vote on Dec. 14 that effectively killed the plan.

"If you have to choose between the National Basketball Association and children, it's no choice," he said in a recent interview. "Children are first."

Educators in Cleveland, Hartford, Conn., and other cities where plans for professional sports facilities have drawn complaints that they divert public dollars from schools can only marvel at the clout of the North East system.

State and local laws vary over the role that school boards have in economic development deals that impact them. Texas is unusual because it requires school districts to weigh certain tax deals that affect the value of land in their areas and lets them opt out of the proposals.

"It's a striking difference," said Haywood Sanders, a professor of urban studies at Trinity University in San Antonio and a national expert on stadium deals. "That's the way the world ought to work, rather than schools' having their revenue channeled away by someone else."

Arena Proposed

The Spurs and a local developer unveiled the arena plan last summer. Their goal was to get the National Basketball Association team out of the cavernous, 65,000-seat Alamodome in downtown San Antonio and into a more intimate, 22,000-seat arena in an abandoned quarry within the North East school district and about eight miles from downtown.

The team's owners said they would pay $20 million toward the arena project and the remainder would come from "tax-increment financing," a mechanism for funding projects that relies on diverting new property-tax revenue from city, county, and school coffers.

While tax-increment financing is intended to help develop blighted areas, critics of the Spurs' deal point out that the proposed tax district covered 3,200 acres, much of which was likely to see growth without the arena.

The Spurs could have asked voters to approve a half-cent sales tax to help pay for the arena. But the owners decided they had a better chance under the tax-increment option, which required approval by city, county, and school district governing bodies.

"That lowered the threshold from a half-million voters to 13 elected officials," North East schools Superintendent Richard A. Middleton observed.

Alarms sounded almost immediately. The growing North East district had a $367 million school construction bond on the ballot in September, and voters threatened to defeat the bond if the schools backed the arena.

"They didn't want public money going to fund a private business," Mr. Middleton said. "Not even the Spurs."

Others were simply confused about the plan.

To allay those anxieties, Mr. Bennett, the school board president, declared publicly that the board would oppose the deal. He was rewarded with a bond victory. In October, the board passed a nonbinding resolution opposing the arena.

But not everyone appreciated the tough stance taken by the board, which was in a position to make or break the deal. When the Spurs encouraged season-ticket holders to make their views known to the North East board members, the school officials were flooded with phone calls.

"They said I better vote for this or my family will regret this for a long time," Mr. Bennett, a retired U.S. Air Force captain, recalled. "I was accused on radio as the person that would drive the Spurs from town."

Other problems plagued the stadium talks, which continued after the district's bond vote.

Much of the debate centered around differing estimates of the economic impact of the new arena. The Spurs predicted that the project would spark healthy economic growth of 7 percent a year; school officials projected less than 2 percent annual growth, a rate that would make it hard to pay off the arena bond in less than 25 or 30 years.

Asked about the gap, Leo Gomez, the Spurs' vice president of communications, quipped in an interview, "Perhaps we wanted the project done and they didn't."

As the fall progressed, the parties were under increasing pressure to reach a deal before a 1999 law became effective that could penalize schools for joining such tax deals.

"We could have been hit twice," Superintendent Middleton declared. "No school district in its right mind would do that."

Buzzer Shot

The Spurs put on a full-court press in December when the school board pondered whether to end the talks.

The team offered to install a districtwide telecommunications network, donate land for new facilities, create a sports-related curriculum, donate vendor space during games, and give the district six rent-free days in the arena a year.

Officials with the Spurs valued the package at as much as $43 million over 20 years.

Regardless, school officials found that some of the land was not usable and deemed the technology plan unworkable. And, ultimately, they estimated the value of the package at $30 million over 20 years.

"For this to work, all of the assumptions had to be just right, and the [arena] debt had to be paid off in 20 years," said Wessley Robinson, the district's associate superintendent for business.

The clock ran out at the Dec. 14 board meeting, which drew about 600 people. After spending $60,000 on consultants and lawyers to review a deal for which school officials saw little hope, the district had had enough.

With the school district out, the San Antonio City Council followed suit a few days later.

"The school district voted before the process could be played out," San Antonio Mayor Howard Peak said in an interview. "But I don't blame the school district for their decision. They have their mission."

The Spurs' future in the city remains up in the air.

"We wouldn't have moved ahead if we thought this would have harmed the district," Mr. Gomez said. "This was a way to build an arena and create a national model between a pro franchise and a school district."

Mr. Sanders of Trinity University found the process educational. The Spurs offered the incentives late in the game because of the school board's unusually strong negotiating position, he asserted.

"Individual sign-off [by the city, county, and school board] on this project made all the difference," he said. And even when enticed with the incentives, the district refused to budge.

"They were in a difficult political situation and made a reasonable choice," he said of the North East board. "It's very easy to get railroaded by the pressures from fans and team officials."

Concern in Connecticut

Educators elsewhere rarely even get a seat at the negotiating table.

Teachers in Cleveland felt so stung by tax abatements given to the owners of new stadiums in that city that they sponsored an unsuccessful referendum in 1997 to limit the practice.

Educators in Connecticut are waiting to see if a recently approved taxpayer-financed stadium in Hartford for the National Football League's New England Patriots will cut into available state aid for schools.

"We'll argue that if you're going to spend $500 million on a stadium, you can spend some on education," said Leo Canty, the executive vice president of the Federation of Educational and Professional Employees of Connecticut, the state affiliate of the American Federation of Teachers. "You'll get a higher return and score more points than the Patriots ever will," he added.

Vol. 18, Issue 21, Page 6

Published in Print: February 3, 1999, as Texas School District Blocks NBA Team's Arena Deal
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