Sports Authority may need infusion of taxpayer cash
Five years ago, the Harris County-Houston Sports Authority came face-to-face with declining tax revenues, and had to issue millions in new bonds to make up for the shortage (via Kevin Whited's Publiustx.net):
Issuing the bonds was necessary to persuade one of the three major investment rating agencies, Moody's, not to downgrade the authority's bonds from investment grade status to junk bonds, said Ric Campo, chairman of the authority's finance committee.
The new bonds were needed to make up for declining hotel and car rental tax revenues, which the authority receives to pay off bond debt. In 2002 and 2003, the revenues sagged 10 percent.
To meet the annual payments for $900 million in previously issued bonds, the authority had projected annual 3 percent increases in hotel and car rental tax revenues.
And taxpayers were assured that all was well:
Many of those who supported building the venues said the county's residents would not pay the bills -- they would be borne by visitors who stayed in local hotels and rented cars.
"The taxpayers of Harris County really aren't affected," said Sue Millican, the authority's chief financial officer.
Not everyone believed all was well, however, and despite calls to shut down the unaccountable, quasi-governmental agency, the behemoth survived. Former HCHSA CEO Oliver Luck worked to bring a MLS franchise here, then became president of it. Former Houston City Attorney Gene Locke became general counsel to the Sports Authority, and now is a mayoral candidate. The agency is politically well-connected and will not be dismantled, despite its dubious raison d'être.
Remember KTRK-13's Wayne Dolcefino's exposé of the agency? How the Sports Authority foots the bill for the Rockets' parking garage while the Rockets pocket most of the earnings? How the agency was maintaining a suite at Minute Maid Park? And don't forget how former chairman Billy Burge let slip that the Sports Authority even paid for the ice for Aeros games.
And now we await the inevitable announcement that the city and county will be working together to help build a new soccer stadium. However, in today's Chronicle we learn that, contrary to every assurance that Harris County taxpayers wouldn't have to pay for the stadiums, the Sports Authority faces new financial challenges that may force officials to break that promise:
Harris County may be forced to pay $4 million or more to the Harris County-Houston Sports Authority due to a cascading series of challenges initiated when $117 million in stadium bonds soured at the peak of the financial crisis last year.
The payments indirectly could upend a promise to taxpayers that public money would not be spent on professional sports stadiums.
City, county and stadium authority officials have struggled to avoid that outcome for months as the due date for a balloon debt payment approaches in November.
The sports authority debt ran into trouble about a year ago when MBIA, a financial firm that insured the variable-rate bonds, was downgraded by investor analysts. The city recently experienced similar problems with about $182 million in variable-rate debt. It avoided heavy charges by using the county as an investor of last resort.
So, by all means, let's add a new soccer stadium to the mix. What could go wrong?
KEVIN WHITED ADDS: If anyone EVER wondered why we are so skeptical of government promises (of utopia, world-classness, a free ride, or what have you), we're happy to point to this as the latest illustration. We are admittedly skeptical when government tells us that taxpayers won't be on the hook for quasi-governmental projects (whether it's the sports authority or the convoluted dealings of the Houston Airport System that Richard Vacar put together with some as yet unclear level of supervision from Anthony Hall and Mayor Bill White, who assure everything is fine).
The question is, why aren't local media just a little more skeptical?
Posted by Anne Linehan @ 09/13/09 12:22 PM | Print |
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