The El Paso Chihuahuas, a Triple-A minor league team in the Pacific Coast League, will play the 2014 season in their new multi-million dollar baseball stadium paid for, built, and owned by the taxpayers of the city of El Paso, Texas.
When first approved by the El Paso City Council in September 2012, the price tag was $50 million. In June of this year, the price tag rose to $60.8 million. By September, it was up to $64 million, but that number is now likely to increase by an additional $10 million to $74 million.
The team is owned by the MountainStar Sports Group (“MSSG”), which purchased the Tucson Padres in 2012 for a reported $20 million. The team played in Tucson in 2013, but changed its name to the El Paso Chihuahuas after the season in anticipation of the move to El Paso. Four very wealthy El Pasoans own MSSG: Multi-millionaire heiress and businesswoman Alejandra de la Vega Foster, her husband, billionaire Paul Foster, Josh Hunt, and his father, Woody Hunt. The elder Hunt owns a $13 billion real estate empire.
MSSG persuaded the El Paso City Council to approved a deal to borrow the proposed $50 million to finance the stadium in a narrow 4 to 3 vote in September 2012. That same month, El Paso Mayor John Cook chose not to exercise his legal authority to veto the deal. At the time, the price tag was purported to be $50 million, $14 million to $24 million below its currently anticipated actual cost.
Cook defended his decision not to exercise his veto days after the vote, telling local television station KVIA that “[r]ealizing this has been something that has divided the community, I don’t think it would be in the best interest of El Paso for me to veto this particular action.”
In November 2012, voters in El Paso approved Proposition 3, a “quality-of-life” bond referendum “which called for the designation of the ballpark project as a sports venue and the use of hotel occupancy tax dollars to finance it” in a 60% to 40% vote. A proposed increase in the city’s hotel tax authorized by that referendum was intended to finance interest and principal payments on the $50 million in debt it was thought at the time would fund the entire cost of the stadium.
But in June, the price tag of the project jumped to $60.8 million. That month, the outgoing El Paso City Council quickly approved the addition of the extra $10.8 million cost to a now $60.8 million debt offering by the city in a 5 to 3 vote.
In response, the MSSG offered to increase the amount of payments it would make under a proposed 30 year lease by $12.1 million, but the four owners pointedly refused to personally guarantee the additional payments. The annual lease payments had originally been only $200,000. Under the new agreement, those payments increase to $400,000 with an inflation adjustment that kicks in after five years.
Those revised lease terms are still quite generous for MSSG. Assuming an average of 70 home games per year, the lease cost per game in the stadium that will seat 7,000 fans will still be less than $6,000.
According to an El Paso Times article from June, “[t]he $60.8 million in bonds will cover the cost of the design and construction of the ballpark, the demolition of the former City Hall building and the Insights El Paso Science Center, public art on the ballpark as required by city ordinance and the cost to sell the bonds.”
Officials with the city of El Paso claimed then that “hotel occupancy taxes will now pay for 80 percent of the ballpark, and that the MountainStar lease and ticket and parking revenues will pay for the rest.”
Newly elected Mayor Oscar Leeser, who took office the week after this vote, also chose not to veto the City Council’s approval of the $60.8 million in bonds it was thought at the time would be sufficient to build the new stadium.
The Times reported that “[c]ity officials said no property taxes will be used to fund the ballpark itself, and added that under the new lease, no general fund revenues such as sales taxes would go toward the ballpark. About $28 million in extra revenue is projected to be generated, which could go back to the city’s general fund or pay off the ballpark debt early, city finance officials said.”
In July, Eddie Holguin, Jr., one of the three El Paso City Council members who consistently voted against the stadium deal, wrote a blistering guest columnist op-ed piece published by the Times in July criticizing the owners of MSSG for refusing to guarantee the increased costs. “Despite being the wealthiest families in the region, they apparently cannot guarantee they will make good on $8 million in increased costs to the stadium in the event of bankruptcy because they believe the rules that apply to ordinary taxpayers when they make a major purchase do not apply to the rich.”
Holguin was skeptical of the revenue projections for the new stadium. ” [I]f the attendance projections dreamed up by MSSG and city staff do not meet expectations,” he wrote, “sales tax revenues that fund city services will need to be used. El Paso property taxes will have to be increased to cover any shortfalls.”
He noted that “[a]lready, the city manager is recommending a $26 dollar tax increase to this year’s budget to cover some of the costs for imploding a perfectly good city hall and moving city council officials and departments to the former El Paso Times building.”
Holguin found “[m]ost disturbing . . . the fact that according to the previous mayor, the MSSG and the city manager conspired to deprive taxpayers of the right to vote on the project in order to ram it through. In this deceptive process, automatic penalties were built into the contract so they could not be changed, even by newly elected officials.”
In September, Holguin’s skepticism about the stadium’s cost and revenue projections were borne out when MSSG wrote a letter to Mayor Leeser, warning him that the final expenditures for the stadium could be as much as $10 million more than the $64 million previously projected.
KFOX TV reported that “both the city of El Paso and MountainStar have started discussing ways to come up with that extra money. . . With the prospect of even more money being needed, some El Pasoans say enough is enough, while others say it’s a necessary investment. “
Nancy Silva is one of those El Pasoans who think enough is enough. “I think that it’s way too much, at first they said it was gonna be a specific price, now they’re saying its going to go up $10 million more,” she said after news broke of yet another cost increase. Silva has changed her mind about the merits of the stadium, as well. “I used to be for the ballpark, now I’m against it,” she stated, “because they keep increasing the price so much, and I don’t think it’s going to bring in revenue, because knowing people in El Paso, they show up for the first three games, but as soon as a team starts losing, they stop going.”
Despite the stadium’s ever climbing cost over runs and growing public dissatifaction, the Chihuahas are scheduled to take the field for the first time in their new stadium in April. Earlier this month, Chihuahas general manager Brad Taylor told the Times that construction of the new stadium is nearing a close, though the final installation of the seats will not take place until February, a little more than a month before the 2014 season begins.
Image: El Paso Times