January 14, 2008
The land for Dynamo Stadium

This story about the city's letter of intent to buy land east of downtown on which a future Dynamo Stadium will be built raises a lot of questions.

The city could spend up to $20 million to buy six downtown blocks for a Dynamo soccer stadium, and it remains unclear if the team would reimburse the costs.

The blocks that officials are eyeing -- just east of U.S. 59 in the warehouse district -- have a total appraised value of about $5.1 million, according to the Harris County Appraisal District, or HCAD.

But local property owners who want to sell have been asking for triple or even quadruple the appraised values, as the area is seen as "hot" for development.

"I do not believe the appraisal value reflects even half of the market value," said Dan Nip, chairman of the East Downtown Redevelopment Authority. HCAD has appraised properties in the six-block area at $12.50 per square foot.

But asking prices by nearby owners have been $30 or more per square foot, Nip said. "If you have the whole square block, you can get as high as $40-$50."

City officials have not said how they would pay for the property. Mayor Bill White said he doesn't want public funds used for the actual stadium construction.

I'm going to start by going off on a familiar tangent, namely why exactly it is that land with a market value of $20 million is taxed as if it were worth $5 million. Wouldn't it be nice if your $200,000 house were taxed as though it were only worth $50,000? Well, nice up to the point where the city, county, school district, hospital district, community college district, and state all declare bankruptcy. All I'm saying is that I just don't understand the disparity here.

All right, Mayor White has said all along no public funds for building the stadium. That's fine, and I agree with that, but as we see it does allow for quite a few other possibilities. Infrastructure improvements - street repaving, storm drainage repairs, that sort of thing - I'm down with. Buying the land, I'm not so sure. Is this a loan? A gift? A deal where the city becomes the Dynamo's landlord? Are public funds in play for this, or is there some trickery up the Mayor's sleeve? Tell me more, please.

I realize some of these things may be under negotiation right now. And given the Dynamo ownership issue, things could take awhile to shake out and be presented to the public. But at this point, I have no idea what to think. I'm just hoping we don't get bait-and-switched.

Since 2003, five MLS teams have built soccer-specific stadiums, and all have used partnerships of some sort involving either city, county, state or another public entity.

Five of those teams -- the Los Angeles Galaxy, Colorado Rapids, FC Dallas, Chicago Fire and Toronto FC -- manage the stadiums, although only two, the Galaxy and the Crew, actually own the stadiums.

Two more teams, Real Salt Lake and the New York Red Bulls, have begun construction.

Deals vary. The Galaxy's $150 million Home Depot Center and sports complex in Carson, Calif., was developed in its entirety by team operator AEG on land owned by Cal State-Dominguez Hills.

Dallas got its 20,000-seat Pizza Hut Park and soccer complex thanks to multi-million dollar investments by the city of Frisco, Frisco ISD, Collin County and team owner Hunt Sports Group.

The majority of MLS teams still lose money. But the league argues the loss gap is narrowing with recently signed TV deals, new stadiums and increased exposure, which brings in advertising dollars.

Nip said he would like the Dynamo stadium to be privately owned, rather than the city owning the stadium and leasing it back to the team.

Private ownership would generate property tax revenue for the city, or for the East Downtown Redevelopment Authority, which is a Tax Increment Reinvestment Zone. TIRZs capture and reinvest tax revenues from recent land improvements.

So in the context of what we know now, would the city buying the land and leasing it to the Dynamo, where they play in a stadium they built, count as private ownership? Or do the Dynamo have to own the land as well? I'm ready for some answers here.

Posted by Charles Kuffner on January 14, 2008 to Other sports

Where is the sales data of nearby lots to validate the $30/sq. ft. that these owners are asking?

Plenty of lots down Leeland and Polk have been sold recently for town homes. You would think that HCAD would have appraised this potential stadium land in the $30/sq. ft. range, if these town home lots sold that high.

Posted by: Sergio Davila on January 15, 2008 5:20 PM