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Planning for the Down Side of Ballpark Development

Omaha Storm CatchersWe’ve seen several high-profile ballpark projects launched with the goal of economic development in hand. The consistent criticism: what if the development goes bad? As we can see in Papillion, a properly structured ballpark financial plan will shield taxpayers and isolate risk even if the development fails to take off.

Papillion, Neb., is home to Werner Park, home of the Omaha Storm Chasers (Class AAA; Pacific Coast League). When the Storm Chasers were casting about for a new home after the decision was made by Omaha to move forward with a new downtown College World Series ballpark, Papillion stepped forward with a ballpark plan with an economic-development component.

By and large, the Storm Chasers have been a big success in Papillion: strong attendance, consistent success. But the expected development hasn’t happened. Part of it is timing — the ballpark opened in 2011, when the economy was in the doldrums — and part of it is location, as the ballpark is just outside the main centers of development in the area. There were big plans for an entertainment district and more near the ballpark, but those plans have not panned out, although there have been some lower-level proposals for the area. The subdivision surrounding the ballpark, Sanitary and Improvement District No. 290, may need to declare bankruptcy. (Not an unusual situation, apparently. Then again, Sanitary and Improvement Districts are unique to Nebraska and play by different rules than, say, Tax Increment Finance districts. SIDs are underwritten by tax-exempt warrants and bonds sold to investors; they take on the risk, not taxpayers.)

In the past, the lack of planned development specifically near the ballpark would have been a direct pull on the city and the county. But here, risk was apportioned into different buckets. The SID risk was separated from the ballpark risk, with Papillion and Sarpy County taking on different roles. Infrastructure work to the area has long been paid for, and the Storm Chasers and Werner Park are more than pulling their weight. In fact, the ballpark itself generates enough revenue to pay down debt, and attendance is up again this year. From the Omaha World-Herald:

The good news is that the Omaha Storm Chasers, Werner Park itself and Sarpy County — which spent some $29 million to build the ballpark — have been insulated from the subdivision’s financial problems.

Sarpy County went into the project expecting private development to spin off property and sales taxes that would help pay off the county’s ballpark debt — something that hasn’t happened yet. Even so, the county has had more than enough revenue to pay its debt through rent from the Storm Chasers, a naming rights agreement with Werner Enterprises, surcharges assessed on stadium and ticket sales as well as county lodging taxes, said Brian Hanson, the county’s fiscal administrator.

For the financing of the new ballpark, the situation has gone better than expected, Hanson said.

“Our revenues are coming in even without any development at the ballpark,” he said. “They’re coming in and covering our debt payments.”

Now, the Omaha World Herald may be taking the SID situation too seriously and implying that development in the ballpark area is slowed. That perception isn’t fair: Sarpy County is the third-fastest-growing corridor in the country, and there’s plenty of development and new housing in the area as well.

Still, the key here was isolating the greatest risk from taxpayers. The lesson here is that a ballpark deal can be structured to pay for the facility, create the environment for future success and still protect taxpayers if things don’t work out as well as anticipated.

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