STATEMENT: LOUISVILLE METRO COUNCIL SHOULD DELAY VOTE, PROVIDE FOR PUBLIC FEEDBACK, AND ANSWER IMPORTANT QUESTIONS BEFORE SUBSIDIZING PRIVATE SOCCER STADIUM
For Immediate Release
Last week, the Mayor of Louisville requested that the city’s Metro Council vote on a $30 million package to subsidize a proposed stadium project for the Louisville Football Club, which plays in the United Soccer League. Taxpayer money, in the form of bonded debt, will be used to purchase approximately 40 acres of land, a portion of which will house the team’s stadium. Initial estimates project that the city will lose more than $26 million on its investment.
Most experts agree that these kinds of investments are an unwise use of taxpayer dollars. An American Economic Association survey found that 86% of economists either "agree" or "strongly agree" that, "Local and state governments in the U.S. should eliminate subsidies to professional sports franchises.”
Though we are open to being convinced otherwise, we at Pegasus Institute have seen no evidence that indicates that purchasing this land with taxpayer money, by taking on new debt, is a good investment for the city of Louisville. We urge Metro Council to take more time in considering this matter, provide ample opportunity for public comment, and get much needed answers to important questions.
Among the many questions that should be addressed are the following:
In 2016, a member of Metro Council reported that the city of Louisville had a road repair deficit of $112 million, and a sidewalk repair deficit of $86 million and that bonds must be issued to pay to maintain the cities road repair needs. If the city is incapable of fulfilling the basic functions of city government, and has already been forced to resort to using bonds for basic infrastructure needs, why is it appropriate for Louisville to bond additional debt to subsidize this project?
With Kentucky’s pension system in a state of crisis, needed reforms forthcoming, and cost changes to local governments undetermined, what gives the Council confidence that the city’s fiscal condition is strong enough to subsidize this project before pension reform is completed?
After last week’s revelations related to the University of Louisville’s basketball program, the chief tenant of the KFC Yum Center, and the future of the program in question, what gives the Council confidence that the city’s fiscal condition is strong enough to subsidize this project before this situation is resolved?
Subsidized professional sports stadiums are rarely able to recoup the initial costs to tax payers. The total cost of the bonded debt will be approximately $41 million to taxpayers, and $14.5 million will be recovered in leasing and other fees. Optimistically, this project is expected to lose more than $26 million for Louisville taxpayers alone, not including commitments from the state. Why is it justifiable for the people of Louisville to assume this loss?
Similarly, the economic justification for a public expense is that it provides a “public good.” What are the ways that this project provides a “public good?”
The city is expected to pay $25 million for approximately 40 acres of land. Officials have noted that this land is unused and would be expected to remain unused in the absence of this project. What measures, if any, has the city taken to ensure that it is paying the appropriate market value of this unused land? Will the details of these examinations be made available to public prior to any vote being taken?
If the environmental clean-up exceeds $5 million, will Louisville taxpayers be responsible for these additional costs?
What factors contributed to the Butchertown site being chosen over the others that were considered? Would this investment of taxpayer money be better suited to a more economically distressed part of the city?
Central to the city’s ability to recoup a minor percentage of its investment is a plan for two hotels and office space to be built on the land. Are there existing commitments from any organizations that can ensure that these additional projects will be completed?
By what year does the Louisville FC anticipate that it will be in a financial position to apply for MLS membership and pay the franchising fees in excess of $150 million? Would the owners be willing to accept a limitation that the city of Louisville will never be asked to subsidize this franchise fee?
If the additional private funds for the stadium project are not secured, what are the city’s plans for the land? What is the potential economic impact/loss to Louisville expected to be in this scenario?
This is not an exhaustive list. Several additional and important questions should be answered before Metro Council votes on this project. We urge them to delay and provide ample time for these to be explored.