This is probably one of those loss leader deals to get the project started.
You know the old lie of "It won't take one cent of tax dollars to fund this project".
Of course the funding will fail as it almost always does and after a while the taxpayers will be asked to pay for the project.
ASU plans athletic-facilities district to fund stadium fixes
by Anne Ryman - Aug. 21, 2012 11:31 PM
The Republic | azcentral.com
In its quest for money to rebuild its aging sports arenas, Arizona State University is taking an unusual approach: trying to convert a large swath of its Tempe campus into a fee-generating commercial and residential development.
ASU has carved out 330 acres just south of Tempe Town Lake, where it wants to create an urban, master-planned development that features world-class amateur athletic facilities surrounded by residential, office and retail space. The businesses would pay a fee in lieu of property taxes. ASU would use the money to fix up its athletic facilities, most notably Sun Devil Stadium.
Some skeptics question whether ASU can pull off its vision for what it calls "the district." Some Tempe community leaders worry that even if that vision is achieved, it will siphon off business and atmosphere from existing developments along Mill Avenue and the Tempe Marketplace mall at Loops 101 and 202.
A tax-research group warns that the district will keep businesses off property-tax rolls, denying revenue to school districts.
ASU officials say the project will create synergy with neighboring businesses, rather than competition, and they are quietly shopping the plan to Tempe elected officials, business owners and other community leaders.
Sometime next year, ASU hopes to select a developer or developers and complete a master plan for the land, which is now primarily occupied by parking lots and a golf course. It could take a couple of years to break ground, and the entire project could take 20 years or more to fully develop.
"It's going to happen," ASU Athletic Director Steve Patterson said.
The idea grew out of ASU's need to rebuild athletic facilities and stay competitive with other Pac-12 Conference schools, which have spent nearly $1.3 billion on stadiums since 1998. [Reminds of of the old joke, "Mommy I want to jump off a cliff because Tommy did". Just because the PAC-12 schools are p*ssing away our tax dollars doesn't mean ASU has to] Sun Devil Stadium is 54 years old and lacks the seating or amenities to generate adequate revenue.
ASU wants to renovate the stadium. Preliminary plans call for a fabric canopy that would cover the upper decks on the eastern and western sides, reducing temperatures by up to 20 degrees.
The shade would allow for day games earlier in the season, an important factor with the launch of the Pac-12 television networks because ASU could get earlier time slots and thus more national exposure. ASU also wants to remove upper-deck seating at the northern end to provide views of Tempe Town Lake.
ASU has been trying for years to find a way to fund renovations. A few years ago, officials began shopping a potential new funding mechanism to state lawmakers: Give state universities the power to set up what would be known as university athletic-facilities districts.
Anything built on state university land doesn't pay property tax under state law. So, instead of charging property taxes, the universities would lease the land to developers and collect a fee up to the amount that could be charged for property taxes. This would be a payment "in lieu" of property taxes and be based on the value of the lease. The revenue flow could be used for athletic facilities.
The legislation failed the first time it was introduced, in 2009, because of strong opposition from fiscally conservative lawmakers. The next year, the universities redoubled their efforts, and the law sailed through as a strike-all amendment to an unrelated bill.
The athletic district takes advantage of the lakeside appeal that ASU's campus gained when Tempe Town Lake opened in 1999. The district covers university-owned property on both sides of Rio Salado Parkway, from Sun Devil Stadium to McClintock Drive.
The property skirts the shoreline and extends back over the rolling hills of Karsten Golf Course, south almost to University Drive. The eastern boundaries stop just short of Tempe Marketplace and the towering Ocotillo Power Plant.
ASU has owned much of the land for decades. Other parcels were purchased or given to the university. About a third of the property is the golf course, which was built on land donated in the 1970s and developed in the late 1980s using private donations.
It's not uncommon for universities to develop land not used for classrooms and research and to rent space to private businesses as a way to bring in extra money.
ASU, for example, owns the Brickyard building at Mill Avenue and Seventh Street in downtown Tempe and rents space to businesses on the lower level.
Real-estate experts say it's unusual, though, for universities to attempt the scale of what ASU is trying to do by developing hundreds of acres with residential and commercial space and using the proceeds to renovate sports facilities.
ASU officials and other experts say although more universities are leasing parts of their land for development, they are unaware of any school attempting a project of the size and kind of ASU's.
It could be years before any of the district is developed and begins producing fees. But revenue projections could be used to persuade a bank to lend the athletic district money to start on stadium improvements. University officials are putting together a stadium- financing plan that they say could include a loan and private donations.
Depending on the extent of the renovations, officials have said, upgrading the stadium could cost as much as $300 million. In a recent interview, ASU's athletic director declined to give a minimum or ceiling for the project.
In a legislative analysis presented to the Arizona Senate in 2010, ASU estimated it would need "at least $170 million" for structural repairs to Sun Devil Stadium. If ASU chose to issue bonds for the entire $170 million, the district would need to generate $13.3 million annually to pay on the bonds, the analysis said.
How much revenue the district will generate depends on what is built. In the early years, ASU officials said the revenue could be single-digit millions. That could increase to tens of millions annually at build-out.
For now, ASU officials are giving only broad concepts of what could be built. Specifics will come later after a developer or developers are on board.
In keeping with the university's focus on sustainability, officials envision a densely populated urban setting where footpaths and bike paths reduce reliance on cars.
The curving Rio Salado Parkway now used as a quick way to get to and from Loop 202 or sports events could become a kind of Main Street, lined with commercial development.
Street-level businesses could wrap around parking structures. Art studios and galleries are possibilities. Office and residential space could be located on the upper levels of buildings with solar panels blanketing rooftops. Karsten Golf Course would eventually be developed, although a smaller, 30-acre area likely would be preserved as a golf practice facility, Patterson said.
ASU hopes to attract amateur athletic groups by providing new and renovated athletic facilities, including new fields, and all the related businesses: hotels, restaurants, health-and-wellness clinics and spas.
"The hope would be these athletic facilities, these private facilities, would all be sort of in an urbanization setting that provides a great new place that has office buildings and hotels and commercial facilities all together with a win-win-win scenario," ASU President Michael Crow said.
Crow's dream is that the facilities would eventually host all kinds of amateur events on a scale similar to the Pan American Games, held every four years before the summer Olympics.
The key to success is an improved, multipurpose stadium that could handle football, soccer and other sports, he said.
The district's proximity to the rest of the ASU campus south of University Drive is expected to be a selling point for ASU employees, who could live there and walk to work. Officials also are touting the area's transportation benefits. Light rail bisects the area near Sun Devil Stadium, and Phoenix Sky Harbor International Airport is minutes away. Complaints and risks
ASU's plan has sparked complaints and worries.
One of the most vocal critics has been the Arizona Tax Research Association, a taxpayer watchdog organization. President Kevin McCarthy said the group is opposed to special districts that keep businesses off property-tax rolls.
Whatever develops in the athletic district won't be part of the property-tax base, so schools in the Tempe Elementary and Tempe Union High School districts, and other entities that levy taxes such as Maricopa Community Colleges, won't receive property-tax revenue.
In the case of public K-12 schools, the property is essentially "invisible" from the total assessed value of property in school district boundaries, McCarthy said. So a district's bonding capacity, the maximum amount a district can borrow to fix up schools, is lower than if the businesses were on the property-tax rolls.
In his State of the City address last year, then-Tempe Mayor Hugh Hallman warned that the city must recognize that the ambitious project presents risks. If it's built too fast and outpaces consumer demand, he said, the increased competition could drive down real-estate values. If the district develops too slowly, the area risks not generating enough money for ASU's athletic facilities.
In a recent interview, Hallman said the district has the potential to be a "game changer" for the university and Tempe but must be planned together with surrounding areas.
"Not doing so risks a really bright future and could instead leave us with absolute destruction of the current downtown," he said.
Tempe's current mayor, Mark Mitchell, doesn't share Hallman's concerns. He is confident that any issues that come up can be worked out because city leaders have a close relationship with the university, he said.
"We'll work to get the right type of development," he said. "I was on the council when we developed Tempe Marketplace and a lot of people thought, 'Oh my gosh, you're going to kill downtown.' Those are two different entities. It didn't and it hasn't, even in a down economy."
Nancy Hormann, president of the Downtown Tempe Community, which manages the Mill Avenue District, said property owners were initially skeptical, but their concerns were assuaged after meeting with ASU officials in June.
She said ASU portrayed it as a stadium district with little retail.
"Even if it does happen, it's several years (away)," she said. "Everyone is in sort of a wait-and-see attitude."
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