Reply to Virginia is for Suckers: VA leg looking to spend $1B to lure Washington Commanders

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]Public finance PP here again. Since people don’t seem to grasp how public financed projects work:  the issuer (in this case the Virginia Football Stadium Authority) will issue government bonds for which the payment that is pledged will solely come from taxes generated and collected at the stadium (ticket sales, merchandise sales, rental sales, licensing sales, etc). Taxes will NOT be raised on Virginia residents to pay for these bonds. That’s not how it works. Public finance is the method of financing projects for the public good without raising taxes or diverting funds from a budget.

How is this for the public good? I suspect the argument is: jobs (in construction and then once built in performing its functions), entertainment for the public, good will for the state, and “if we build it they will come” sense that with the stadium will come supporting business and increased opportunities (hotels, retail, restaurants, etc).

Historically public finance has been heavily favored by democrats since people are trying to make this political.

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And what happens if tax revenues generated by the stadium are insufficient to cover the debt obligations?  Will the stadium authority default on its debt, or will taxpayers make up the difference?  You keep ignoring this question, and it’s really tedious.[/quote]

Calm down.

I would need to see the official statement of these bonds to know with certainty but generally, unless these are general obligation bonds, in the event they cannot collect enough taxes to cover the debt service the issuer would not legally be obligated to cover the shortfall. In reality most issuers do not allow their bonds to default and there are several options that can occur such as refinancing (call the bonds and re-issuing) and [b]looking to the state’s general fund from a surplus. [/b]In that event it would come out of state money but not from increasing taxes.

TIFs (tax increment financing) where increases in property taxes would raise concerns for me as a tax payer but that’s not this kind of project. For example: ALL of the District, all of it, and all of its future increases in real property taxes collected, have already been pledged for debt service for bonds the district has issues in the 2000s. This was how the city revitalized Chinatown/Gallery Place. So, given we are on a big increase in real property assessments, say we hit a recession like in 2008 and real property assessments start to go down.  Well, you will be collecting less total taxes. So one way to solve that problem would be to increase the tax rate. That is when tax payers end up paying. But this Virginia football stadium isn’t a TIF for property taxes. [/quote]

And there you go.  That may not be a tax increase, but it is taxpayer money.  If there is a meaningful surplus, I want it going to an actual public good, like education or healthcare.  Not to some crappy, second-rate football team so the owner can make a few more pennies while he gropes female employees.[/quote]

These kind of bonds are used to finance all kinds of public good projects: public schools, public colleges and universities, public hospitals, public transportation (WMATA, even BWI), roads, bridges, water/wastewater, revitalizing “blighted” areas, public housing, workforce housing, senior housing, etc.  This is also how Arlington and Alexandria are subsidizing Amazon HQ2. There is no such thing as a free lunch. All investments include risk. Bonds are one avenue to raise financing without necessarily raising taxes or re-allocating budgets. Whether this particular project is a good bone investment, I don’t know. An “official statement” would need to be published and distributed outlining by law in detail the financing structure.

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