SANDY By the time a 20-year bond on Real's soccer stadium is paid off, it will end up costing taxpayers $28.1 million extra in interest.
Tack on that debt service, and a public purse of $45 million on the stadium site is increased to a total of $73.1 million. Even though Real will still receive $45 million in public funds for land purchase and site work, taxpayers will pay millions more for interest payments on those bonds.
Sandy's City Council, acting as the Redevelopment Agency (RDA) Board, gave unanimous approval for an RDA budget Tuesday that includes the last segment of public funding for the site.
Real is building a 22-acre soccer stadium at 9400 S. State in Sandy that will cost more than $110 million to construct. Real's private financing, through New York-based iStar financial, will pay for $65 million of it.
Six additional acres Real owns, for a mixed-use development to couple with the project, will also receive assistance from Sandy through RDA dollars.
But revealed in that RDA budget are the numbers behind a $10 million RDA bond and a state-approved $35 million hotel tax bond to be used on the site. It will end up costing taxpayers $28.1 million more, since the bond is being paid over a 20-year period.
So bonding for the $35 million hotel tax bond will cost $56.4 million and bonding for the $10 million RDA bond will cost $16.6 million.
"It's like your house payment," said Randy Sant, Sandy's economic development director. "We bonded for $35 million, but with interest, it costs $56 million over 20 years. ... And we need about $16 million in tax increment to net a $10 million dollar bond."
Council chairman Bryant Anderson said these payments have been planned since the beginning. When the state approved the use of Salt Lake County's hotel tax dollars to be used for the soccer project, "they made sure we had enough money to do interest," he said.
That $45 million will pay for land purchase ($25 million), off-site and on-site public infrastructure and parking ($7 million), landscaping and a public plaza ($3.4 million) and a development incentive fund ($9.5 million) for future projects on the site.
The Utah Taxpayers Association, a nonpartisan group advocating tax policy, has opposed publicly funding the stadium. Royce Van Tassel, the group's vice president, said, "We anticipated something like this would happen.
"This really doesn't come as a surprise to us. This is one of the reasons we opposed this taxing capacity to Sandy city for Real," he said. "You really have to ask is this the best use of taxpayer dollars?"
The hotel tax bonds were issued in August, purchased through New-York based All Points Capital, with George K. Baum as the underwriter. The interest rate is 4.88 percent.
Sandy's budget calculates that an estimated $46 million in sales tax will be generated by the Real project in that 20-year time period $41 million going directly to the state.
Sandy's Sant added that the development around the stadium will be the big revenue generator.
"We have confidence that we've got a good project. And I think when we show them what's going to be developed around there, we'll show them it's going to be a great economic development tool," he said.
Anderson echoed that comment, saying, "There's a huge payback. Even though there's quite a bit of money to start, it's a catalyst to get things going."
Sandy next will approach various taxing entities for the $16.6 million RDA bond within the year.
Salt Lake County, Sandy Suburban Improvement District, Salt Lake County Library, the water districts servicing the area and mosquito abatement districts will be asked to forego their cut of Sandy's property taxes from 2008 to 2028 for the project. The Jordan School District is the largest taxing entity but will not be asked to contribute because of a 2006 promise Real made to not take any money for the project from the school district.If some of those entities do not opt-in to the RDA, Sandy is not obligated to issue $10 million to Real. The amount could be lower.
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