TO: Mayor Greenlaw and Members of City Council
FROM: Beverly R. Cameron, City Manager
RE: Proposed Incentives for Baseball Project
DATE: August 22, 2013
Attached please find a document that describes proposed economic incentives for the development of a multi-use baseball stadium and amateur baseball complex. This complex will be privately developed by a partnership comprised of the Hagerstown Suns and Diamond Nation (the “Team”). The proposed incentives are recommended by the City’s negotiating group, and have been shared with the Suns/Diamond Nation.
From the public hearing held July 9th, you will recall that two consistent themes were expressed. One, citizens indicated strong support for attracting a minor league baseball team to Fredericksburg. Two, citizens expressed opposition to a proposed publicly funded stadium with general obligation debt of approximately $33 million and a Special Service Tax District of $0.32 per $100 of assessed value. Consequently, City Council instructed the city manager, in consultation with Vice Mayor Ellis and Councilor Howe, to seek an alternative agreement with the Team.
The proposed incentive package, we believe, delivers an exciting baseball and economic development opportunity for the City, in a manner that minimizes the City’s risk and places the burden of performance on the Team. The Team is poised for success in this market. The Brailsford & Dunleavy market analysis, prepared for the City’s EDA in May 2013, concluded that Fredericksburg has an exceptionally strong demographic profile for minor league baseball given its ideal household wealth, spending, and size characteristics. B&D further concluded that paid attendance is expected to reach 4,100—4,600 patrons per game in a stabilized year. Diamond Nation, the amateur baseball and softball training and tournament component, estimates over 230,000 player visits annually (and 25,000 hotel room nights).
Perhaps the most important concept of the deal package is the use of performance incentives through a Tourism Zone structure as permitted by State law and City Code. The proposed performance incentives represent payments back to the Team based solely on the Team’s economic success. Stronger financial performance by the Team results in larger incentive payments by the City. As you know, incentive payments are made in arrears, after performance has been demonstrated, not in advance, when financial forecasts are speculative.
The proposed deal structure limits the City’s financial risk to $7 million, the estimated cost of a stadium parking facility. This public investment is necessary to bring affiliated minor league baseball to Fredericksburg. Without the public parking component, it is unlikely that the Team could assemble sufficient private financing to make the project a reality. The Team’s investment for stadium and amateur field facilities will be approximately $29 million.
The proposed economic incentives have been crafted during countless hours of discussions between the Team and City representatives. We are in agreement on all major business terms. To some degree the incentives remain a “work in progress.” Further discussion is needed to achieve agreement on the “Meals and Lodgings Tax Supplemental Performance Grant.” Faced with a deadline to bring this package to City Council on August 27th, the parties acknowledge that the specific business terms of this incentive are incomplete.
Nonetheless, we have reached a point where both the Team and the City’s negotiators are ready for City Council and the public to consider our proposal. On behalf of Vice Mayor Ellis and Councilor Howe, we look forward to the discussion on August 27th.
"City of Fredericksburg Baseball Project Proposed Economic Development Incentives 8/22/2013" is attached as a .pdf.
For more information, see these related stories:
- Hagerstown Council Supports New Stadium as Suns' Ownership Meets with Fredericksburg
- Howe, Cameron, Quinn to Talk Baseball Tuesday
- Baseball Offer In Suns' Hands, Councilmember Said
- Judge Denies Injunction for Closed Baseball Meetings
- Group Filing Injunction Against Closed Session for Baseball Talks
- Fredericksburg Baseball: Why Was The Public Locked Out of Meeting?
- City Representatives, Hagerstown Suns to Discuss Stadium Terms
- Baseball in Fredericksburg? Sure. This Deal? No!
- 5 Public Hearings Scheduled July 9
- Baseball Rally to Precede Public Hearing
- Hagerstown Suns to Fredericksburg: Do You Want Baseball Here?
- City Council, Hagerstown Sun Reps Meet Monday
- City Seeking Baseball Stadium Lease Consultant
- City Council to Discuss Baseball in Wednesday Closed Session
- City Council Approves $50K for Stadium Study
- Fredericksburg Baseball Negotiations with 'Specific Organization' According to City Manager
- City Conducting Study for $25M Stadium
- Group Wants Support For Pro Baseball Team in Fredericksburg Region