One item in that announcement caught me by surprise. A paragraph toward the end predicted the deal “as currently planned, would generate more than $200 million in private development.” That’s more than three times as much value as the anticipated $60 million worth of residential, commercial, restaurant and parking space I’d been reporting since February.
Which number is accurate?
First, a little background. According to the deal, Greenstone Properties, an Atlanta-based developer, would buy 11 acres in the area of Americana Boulevard and Shoreline Drive from St. Luke’s Health System for an undisclosed amount of money. Greenstone would donate four of those acres to a government agency that would own the stadium, perhaps the city of Boise or Greater Boise Auditorium District. That’s where the stadium would be.
In addition to the land, Greenstone would donate $1 million toward the construction of a stadium. The city of Boise would match that with $1 million of its own. The auditorium district, which gets its money from a tax on hotel rooms, might put in some money of its own. The city’s urban renewal agency would borrow money to cover the balance.
This is where the difference between $60 million and $200 million becomes important. The renewal agency gets its money from what’s known as tax increment financing.
Here’s how tax increment financing works: When the city establishes an urban renewal district, the tax money from that district is split. For as long as the district lasts — typically 20 years — all of the property taxing entities — city, county, schools, highway district, mosquito abatement district, etc. — receive the same amount of tax money from the new district as they were getting at the moment the district was established. As the value of property rises, additional tax money goes to the renewal agency, which is supposed to use that money to breathe economic life into the district.
Boise has four urban renewal districts and would establish a new one for the stadium and surrounding area. Chris Schoen, Greenstone’s managing principal, said $60 million is the minimum amount of additional private development needed to make payments on the renewal agency’s loan. Other income, including rent payments from the Hawks and a minor-league soccer team, as well as fees for concerts and other events, would help cover the debt payments. Those amounts, like most details of this project, are very much up in the air right now.
But Schoen expects the total private investment in the new district will be substantially more, perhaps up to $200 million.
Obviously, that would be a huge difference. By my calculations, $60 million of taxable property value would generate close to $1 million in property taxes every year for the renewal agency and, when the urban renewal district expires, local governments. So $200 million would generate more than $3 million.
That additional income could help pay down the renewal agency’s loan much faster. Or the agency could spend it on other amenities, such as a new parking garage.
It’s worth keeping in mind that, even if the stadium gets built and it spurs the full $200 million of private investment, the private development likely won’t happen immediately, so the agency couldn’t use all that extra tax money in the early years of the loan.
Another note: Greenstone almost certainly would be a big player in that hypothetical $200 million investment, but it likely won’t be the only one.
“I would love to, but we don’t control every square inch in a one-mile radius surrounding that stadium,” Schoen said.
Of course, this is all just theory right now. There’s a good chance all the various parties get on board and the stadium gets built and that section of Downtown becomes a bustling stadium district. Then again, there are a lot of complications and so a lot of chances for one agency or private group to derail the whole plan.
Schoen did say that reaching the agreement with St. Luke’s was a big step. The biggest variable now is the willingness of the various public agencies and their governing boards to get behind the project, he said.
The next steps are forming the new urban renewal district and conducting a study on whether this whole stadium thing could actually work. Keep an eye on those processes, because they’re a good indicator of the broader political appetite for the project.
Also, watch the rhetoric leading up to and the results of the auditorium district’s May 16 board election. The people who win that election will help run the district and could decide whether the stadium gets built.