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Budget committee inaction again derails Major League Soccer funding

A rendering of the proposed St. Louis soccer stadium.
Courtesy of HOK
The failure of an aldermanic committe to vote on potential public funding for a soccer stadium has again put public funding in doubt.

Updated Jan. 20 at 9:00 a.m. with comments from SC STL — Supporters of a Major League Soccer stadium in downtown St. Louis walked into the city's Ways and Means committee on Thursday, cautiously optimistic that a proposal for public funding was on track to go to the voters in April.

Six hours later, they walked out shell-shocked, as members of the committee refused to take a vote on the measure. The decision closes even further the window of opportunity available before a Jan. 24 deadline.

The decision facing aldermen was relatively simple: Should voters get a chance to decide whether to direct additional use tax revenue toward the soccer stadium, which would sit just west of Union Station on land owned by the state of Missouri? The bill did not commit aldermen to financing the stadium, nor did it raise taxes. The use tax would only have increased if voters approved a separate sales tax increase.

But, as so often happens at the Board of Aldermen, the process was an awkward one. Committee members had not yet had a chance to see the overall financing plan for the $155 million project, which is set to be introduced on Friday. That meant they would be asking their constituents to help finance a stadium without having the complete picture themselves. So, support from the aldermen was shaky going in.

"I have made no secret of the fact that I have not been a fan of the timeline or the process undertaken so far regarding the MLS proposal," said Alderman Christine Ingrassia, D-6th Ward, a reluctant sponsor of the use tax and financing plan bills. "I introduced this legislation as a placeholder, hoping we could get to a place where I felt comfortable to take a smart financial proposal under consideration that we could in turn pass along to voters."

Proposed financing structure

According to a financing plan sent to St. Louis Public Radio, the stadium’s design and construction would cost $140 million. Roughly $15 million in private money would go to site improvements.

Dave Peacock, right, was on hand to watch the Ways and Means Committee hearing on Thursday.
Credit File photo | Jason Rosenbaum I St. Louis Public Radio
Dave Peacock, an executive with SC STL, is shown here in a 2015 file photo with Jim Woodcock, a spokesman for the group. Peacock and Woodcock were both active in the efforts to keep the Rams in St. Louis

The MLS ownership group SC STL would provide $95 million of the project’s costs, as well as cover the expansion fee and any cost overruns. St. Louis would issue $50 million worth of bonds that would be paid off over time with proceeds from a proposed use tax increase. The city would also contribute up to $10 million (directly or through issuance of additional notes or bonds) from 50 percent of certain sales tax revenue generated from within the stadium.  The city also agreed to lower the so-called amusement tax if SC STL contributed a certain amount of money.

The plan has a number of contingencies. First and foremost, the MLS would have to award St. Louis a franchise — which is not a sure thing because other cities are seeking out the four slots. Voters would also have to approve two ballot initiatives — one increasing the city’s sales tax and another authorizing a use tax increase from the sales tax hike to help pay for the stadium. Both of those initiatives remain stuck in committee.

SC STL also would have to find a way to get around Missouri Gov. Eric Greitens' opposition to public funding for stadiums, while still drawing state support. A spokesman for SC STL sent out a statement on Wednesday saying the ownership group forged a “path forward” with Greitens, and a footnote in the financial plan states that the state “will contribute (via lease or conveyance of fee title) the majority of the Project Site and will perform certain site clearing and infrastructure work.” It's not clear if those two items are connected.

Skeptical aldermen

SC STL executives Dave Peacock and Jim Kavanaugh did their best to convince aldermen that the deal would benefit the city financially.

"The ownership group is investing at least $245 million, which is going to create 400 to 500 jobs for the community and is going to do some pretty unique things for the community being set up right next to Union Station," said Kavanaugh, chief executive of World Wide Technologies.  

But comments from Paul Payne, the city's budget director, made it clear exactly how tough their job was.

"I’m looking at budgetary gaps, significant ones building for next year, so any time you have potential available revenue, you’d want to be able to apply it towards that gap," Payne said. 

That sealed the deal against the plan for an already skeptical Alderman Scott Ogilvie, D-24th Ward.

"There are mission-critical things that local government is supposed to do that we are not doing right now," he said. "And the way the use tax is currently allocated, a lot of that spending is public safety. We've spent the last two years talking about how our highest priority needs to be hiring and paying officers. This really is a direct trade-off between debt on a new stadium or public safety spending." 

St. Louis Alderman Scott Ogilvie speaks in favor of his bill exempting sheltered workshops from the city's minimum wage law.
Credit File photo | Jason Rosenbaum | St. Louis Public Radio
Alderman Scott Ogilvie, D-24th Ward, shown in a 2015 file photo, called public funding for a proposed soccer stadium a trade-off between spending on public safety or more debt.

Ogilvie was also worried that putting the use tax on the ballot along with a proposed sales tax for economic development would sink both measures.

Alderman Stephen Conway, D-8th Ward and the chair of the committee, pushed his colleagues to pass the ballot language.

"Putting this on the ballot doesn't cost us anything," he said. "You can sit there and tell the voters this is a bad deal, that you would rather have the money for a homicide detective. But I don't have to be for it or against it. The group that wants to be build a soccer stadium has to convince people that this is a good idea."

"We can't abdicate our responsibility to create good legislation," shot back Alderman Antonio French, D-21st Ward and a candidate for mayor.

Rather than risk the bill failing in committee, Conway decided not to take a vote. He called the stance of some opponents hypocritical.

"Two of the four that I assume were going to vote against it were the ones that threw holy hell when we had the Rams stadium. Now when it’s the opportunity to give the public a vote, they don’t want to give the public a vote," Conway said.

Jim Woodcock, a spokesman for SC STL, said the delay was "disappointing."

"But if the purpose was so everyone on the committee can fully study the contents of the financing agreement, which was filed only Wednesday night, then that is certainly fair and completely understandable," he said in a statement. "Our belief in this project is equal to our belief that the people of St. Louis should have a voice in the process. That’s really our primary ask, to arrive at a ballot measure that will give city voters the opportunity to decide the potential of Major League Soccer in downtown St. Louis."

Next steps

The window for an April vote on the funding is still open, however slightly. Conway would have to call a Ways and Means committee hearing on Monday to consider the sales tax increase, the allocation of the use tax and the financing plan. The two tax bills would have to pass out of committee on Monday. Aldermen would have to hold a special meeting on Tuesday to take some more procedural steps, and then send it to the mayor at their regularly scheduled meeting on Jan. 27. Finally, a judge would have to say it was OK for the city to miss the Jan. 24 deadline.

Ingrassia, the sponsor, had no real interest in making that happen.

"While I think it's smart to turn this over to voters in situations like this, why would we want to go them and say don't vote for this, it's a terrible idea when we had a chance to fix it here?" she said.

Economic development sales tax

Despite the lack of enthusiasm for the stadium proposal, Ingrassia said she is confident aldermen will ask voters to approve a separate sales tax increase for economic development. The measure got caught in the stadium crossfire, and would have to follow the same convoluted path as the MLS funding to the April ballot.

Jason Rosenbaum contributed reporting for this story.

Follow Rachel on Twitter: @rlippmann

Rachel is the justice correspondent at St. Louis Public Radio.