Court Says No to Sports Arena, But is it Dead

Yesterday, Judge Amy Clark Meachum of Travis County delivered a blow to the proponents of a sports arena for downtown who had intended to use the 2012 bond money for a multi-purpose performing arts center that the voters had voted on in 2012, or so some believe. The City of El Paso had sought a court order from the Travis County judge ordering that the bond monies were lawful. The City sought the court ruling to sell the 2012 bonds for the construction of the performing arts center. The performing arts center become controversial for two reasons. The first was that the new construction targeted the Duranguito neighborhood for displacement. The second was that some voters believed that building a sports arena was not what the voters voted for in 2012 when they cast their votes for a performing arts center.

The City was hoping to have the court issue a ruling that not only authorized it to sell the bonds for funding the project, but that the project could be a sports arena. After the ballpark was built by the City, there were indications that the same individuals that own the Chihuahuas baseball team wanted to bring another professional sports team to the city. MLS soccer was mentioned as the new potential sport. Downtown business and land owners as well as businesses represented by the El Paso Chamber of Commerce wanted a sports arena to complete downtown redevelopment around entertainment venues. The sports venue was important to the City’s plan.

Judge Meachum’s order authorizes the City to sell the bonds but it limits the City’s ability to use those bonds for a sports arena. The City received the authority to sell the bonds but it was also prohibited from using the bond monies for a sports arena. The City had budgeted $180 million for a sports arena.

But is a sports arena dead?

Although Judge Meachum’s order prohibits the City from building a sports arena with the bond money, it does not prohibit the City from using the bond revenues to build a performing arts center along with the necessary infrastructure, such as parking facilities and acquisition of land, for example, that could be leveraged into a sports arena.

You should note that upon the election of Dee Margo, the city has embarked on a plan to increase its ability to issue certificates of obligations. City officials are considering raising the city’s tax debt cap to accommodate more certificates of obligations. The city council has been discussing issuing $69 million, ostensibly to shore up funding deficiencies on the voter approved projects of the west side pool, San Jacinto bathrooms and the Mexican cultural center, among other projects. Yesterday, city council authorized the issuance of COs for streets, patrol cars and the two 2012 pending items, the pool and the cultural center.

When asked about the affect on taxes, the City’s position is that taxes will not go up now because the bonds won’t be sold until later. Thus, pushing the expense on the taxpayers. Oscar Leeser had vetoed the previous attempt to issue COs based on the notion that it went against the city’s policy about issuing debt without voter approval. The new council has now reversed that.

Once the City has the ability to issue non-voter approved debt, the City receives the right to issue certificates of obligations to build the sports arena as part of the arts performing center that the Austin judge approved.

Consider that Dee Margo represents the business community. The business community is adamant that the future of El Paso lies on redeveloping downtown into an entertainment district with sports venues as the cornerstones of that district.

As such, even though the judge has denied the City the right to use the bond money for building a sports arena, the City can still use non-voter approved bonds to shore up the authorized amounts to build the arena they so desperately want.

To do this, the City just needs to argue that the cost for bonds will be paid for by future revenues. This is the argument they used for the Plaza Theater and for the ballpark. How did that work out for the taxpayers?

Keep an eye on this because the City still hold most of the cards.

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