Austin council members up the ante on a soccer stadium deal

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The Columbus Crew plays Chivas USA April 9.

Four Austin City Council members on Tuesday called for more than twice as much rent, a $13 million train station and a broad array of other concessions from a Major League Soccer franchise attempting to relocate to Austin.

Just two days before the council is scheduled to consider an agreement with Precourt Sports Ventures to build a $200 million stadium, council members Alison Alter, Ora Houston, Leslie Pool and Ellen Troxclair said the Precourt offer failed to meet what they said were eight community principles.

The council members upstaged an afternoon of presentations from developers hoping to convince the city that there are better offers than Precourt’s for the development of a stadium on a 24-acre, city-owned site on the city’s northeast side known as McKalla Place.

Mayor Steve Adler and the council heard short presentations from four of the five groups who had filed proposals with the city. Two of the four proposals include paying hundreds of millions of dollars in property taxes on their developments, something not included in the Precourt offer. A third offered an alternate plan that would return a comparable amount to the city and community groups. Three of the four agreed to pay for a new train station serving the stadium.

The council had criticized city staff at a work session last week for leaving numerous unresolved negotiating points in a term sheet hammered out between staff and Precourt. On Tuesday, the four council members made clear they weren’t waiting for staff to return with the answers to those questions.

Rather, in their McKalla Place Amendment Package, the council members asked that no final agreement with Precourt be considered without “a full accounting of all direct costs and forgone revenues envisioned in the agreement.”

A final decision on the agreement would be made by the council, rather than being left to the city manager, according to the amendment package.

Troubled by an initial offer from Precourt to lease the McKalla Place property for $1 a year, the four council members, in their proposal, ask for an initial annual rent of $958,720, more than twice what Precourt offered, and escalating by two percent a year for the length of the lease.

Two thirds of that rent would be allocated to the Austin Independent School District, 21 percent to Travis County and six percent each to Austin Community College and the city’s public health system, called Central Health. The division is not unlike the apportionment for property taxes.

If other developers are willing to pay for a train station at the site — something the city estimated would cost $13 million — Precourt should be willing to fund one, too, the council members said.

In addition, the plan asks Precourt to commit a fixed amount, $2.5 million, for capital repairs over the 20-year length of the lease, rather than burden the city with that responsibility.

Council members asked Precourt for a $3 surcharge on each ticket sold to a soccer game, among the highest surcharges in professional soccer. The city would dedicate $1 each from those ticket sales to mobility projects, affordable housing and the general fund.

The proposed agreement asks Precourt to increase its donations to local nonprofits and charitable organizations by $579,000 over the length of the initial 20-year lease.

And for the first time, city officials are asking that Precourt agree to defined penalties if the team decides to break its lease and leave Austin. Precourt is currently being sued by the city of Columbus and the state of Ohio for wanting to relocate.

The agreement asks that for breaking its contract with the city, Precourt pay for lost rent at the rate of the land’s highest and best use — that is, returning McKalla Place to a developable state– and reimburse the city for any remediation of the land necessary.

“By our analysis, this package would reduce the risks, costs, and forgone revenues to local government and increase Precourt Sports Ventures (PSV)’s commitment to the Austin community, while still proposing that PSV spend less than what they would in a scenario in which they simply paid rent and property taxes,” the council members wrote.

They said they created the new agreement because the term sheet the council was to consider Thursday failed to encompass principles the council generally agreed upon in June:

  • ensuring the team owners invest in the community,  
  • fully accounting for all city subsidies,
  • having all options on the table,
  • having a full and complete proposal in hand,
  • not making open-ended commitments,  
  • enforcing the deal,
  • providing public benefit for public property, and
  • making credible mobility and environmental commitments.

“At first glance it appears the proposals in their entirety would effectively make bringing MLS [Major League Soccer] to Austin virtually impossible,” Richard Suttle, Precourt’s Austin lobbyist, told the Austin American-Statesman. “These terms are new and not consistent with what we have been negotiating for some time.”

Prior to the release of the amendment package and following the discussion of proposals at the work session Tuesday, council member Jimmy Flannigan called the entire process of considering the stadium and what to do with McKalla Place “one of the most frustrating and mind-blowing experiences in my short time on the council.”

Flannigan counted the things he has been asked to absorb: flips-flops on the density of any development on the site, new proposals two days before council members are being asked for a vote, and the call from neighbors to build a giant park for which there is no funding.

“At moments like this I’ve felt like I’ve gone through the looking glass,” he said. “I am ambivalent about soccer. I don’t know how I’m going to vote on this. This process is ridiculous.”

Pool, who has led the charge for a better deal for the city after calling the initial Precourt offer a “massive giveaway,” said little at the work session for which she had pressed, letting the amendment package speak for her.

The developers who pitched on Tuesday each offered up hundreds of units of affordable housing in a variety of mixed use developments, as well as construction of a train station, two components council members have in the past months called critical to any deal.

The amendment package does not address specific demands for affordable housing, something the authors of the package have expressed serious concerns about in past weeks.

Scott Moxham, chief financial officer of Capella Capital Partners, offered two proposals, one an outright $22.1 million to buy the property and develop it, and the other to develop housing and office space on a subdivided 14 acres in concert with a Precourt stadium project on the other 10 acres.

Two other sets of developers offered up variations on the same mixed-use theme. (You can see each of the developments proposed to the city here.)

Marisa Perryman made the proposal most popular with the members of the small audience who addressed the council. Perryman, who lives near McKalla Place “with my husband, kids and chickens,” called her proposal Keep McKalla Weird, saying all but three acres of the tract should be developed as a park built on a theme of “recycle, reduce and reuse.”

The remaining three acres would be set aside for affordable housing that would be served by a new train station.

Perryman did not specify how Keep McKalla Weird would be paid for.

Mark Lisheron can be reached at [email protected].

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