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Inside Baseball: Winter Park’s Heavy Hitters Negotiate a Stadium and Spoils of the Game

by | Apr 21, 2014 | Zoning and Development | 0 comments

Inside Baseball: Winter Park’s Heavy Hitters Negotiate a Stadium and Spoils of the Game

While Manatees, Rollins College & Developers Pursue Stadium-Related Revenues & Gov’t Subsidies, Citizens’ Group Petitions to Keep the Stadium Out of MLK Park

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A little more than a year ago Rollins College and (presumably) other baseball principals invoked a Florida statute that kept Winter Parkers in the dark about stadium negotiations with the city. In February 2014, the news blackout expired.

Winter Park Voice has filed numerous Freedom of Information document requests with the city asking to see baseball-related email and other documents. Last week, the city released documents and email to the Voice showing what appears to be a serious negotiation by baseball principals to secure funding for a stadium at Rollins’ Harper–Shepherd field located near Orange Avenue and Denning.

Rollins Document Blackout Request

If Harper-Shepherd Negotiations Fail, MLK Park is a Favored Alternative. Citizen Petitioners Claim that Stadium in MLK Will Increase Traffic/Noise & Affect Quality of Life

Recent public hearings and the city’s interest in Martin Luther King, Jr. Park as an alternative stadium location have motivated a group of citizens to mount a petition drive to keep the stadium out of the park. This citizen-led effort appears to have grown out of concerns voiced by citizens and neighborhood groups that new and proposed Denning-area development – including the prospect of an extension of Lee Road through to Denning Ave. – will choke northwest Winter Park with large buildings and traffic gridlock. As reported by the website HeartofWinterPark.com

 

“The Petitioners Committee contends that the loss of this park would not only be a loss to the entire city, but that the size and impact of a professional minor league baseball stadium in the Martin Luther King, Jr. Park will permanently alter the character of the neighborhood and bring traffic and noise which will affect the quality of life of the residents.”

City Manager Knight Responds to Voice Request for Clarification/Explanation of Stadium Negotiations

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The Voice contacted City Manager Randy Knight last week asking for updated information, clarification of numerous points made in city emails and corrections (if any). Mr. Knight did not respond directly to any of our questions or provide any updates. He did, however, respond with a statement indicating that the ongoing negotiations are a “very complicated and fluid process” adding that he does not have “the authority to bind the city to any deal . . .” and that Jeff Eisenbarth of Rollins College “does not have the authority to bind Rollins to any deal.”

Mr. Knight also said that some of the information we gathered from city email (and questioned him about) was “outdated”, but did not offer any correction or update of the information. The full text of Mr. Knight’s response to Voice questions is shown at the end of this story. A key memo referenced by Mr. Knight is shown below.

Will Rollins’ Harper-Shepherd Field Get the Nod?

Documents provided by the city include a “Term Sheet” memo, submitted by the Manatees’ David Freeman on March 28 that spells out terms of a proposed deal “. . . under which City, Rollins, and Manatees will agree to jointly fund construction of a new baseball stadium to be owned by Rollins and a new parking garage to be owned by City, and under which Manatees will agree to relocate Florida State League professional baseball club to Winter Park in Spring 2016.”

On April 1, City Manager Randy Knight added his comments to the “Term Sheet” memo modifying and correcting various aspects of the terms proposed by the principals. Among the original terms put forward by the principals was a request that the city build a parking garage on land next to Harper-Shepherd field owned by Rollins College.

Proposed Deal Term Sheet

The projected cost to build the stadium garage (to be paid mostly by the city) is $6 million, $2 million of which will be paid by the Manatees baseball organization.

The principals indicate that Rollins will contribute Harper-Shepherd Field and adjoining land plus an additional $4.25 million for the stadium project.

The city’s total contribution could go as high as $6.3 million, most of which would be taken from city CRA funds – if Orange County officials agree to extend the life span of the CRA (Community Redevelopment Agency).

Baseball Principals Lean Heavily on Gov’t Programs Designed to Help Low-Income Communities

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The proposed agreement counts on city CRA money and a $7.5 million federal tax break for the principals. The tax break comes from a program – the New Markets Tax Credit (NMTC) – set up by the federal government to encourage development in disadvantaged communities.

IRS guidelines describe the reason Congress set up the NMTC program as follows:

“This Code section permits individual and corporate taxpayers to receive a credit against federal income taxes for making Qualified Equity Investments (QEIs) in qualified community development entities (CDEs).

These investments are expected to result in the creation of jobs and material improvement in the lives of residents of low-income communities. Examples of expected projects include financing small businesses, improving community facilities such as daycare centers, and increasing home ownership opportunities . . .”

IRS NMTC Guidelines        Winter Park CRA Info        CRA Basics

Is Stadium Use of Funds Intended for Westside Development an Appropriate Use of CRA Money?

Commissioners who oppose use of city money to build the baseball stadium may find themselves in bind when a final stadium deal goes up for a vote. Those who espouse a “no city money” position may be forced to defend a deeply finessed definition of “city money.”

We asked Randy Knight to explain the justification for possible use of CRA funds for the stadium project. We also requested a clarification as to whether CRA funds are fundamentally the same as any other city tax revenues – except that they are earmarked for community redevelopment. Mr. Knight did not respond to these questions.

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History of the Deal: City Didn’t Like Manatees’ Original Offer – Wanted to Avoid Perception that
“. . . the City is giving and everyone else is taking.”

The initial terms proposed by David Freeman in a March phone conversation with Randy Knight apparently did not include any upfront cash contribution by the Manatees. In a follow-up email to Freeman and others on March 17, Knight rejects Freeman’s offer saying “. . . I have given a lot of thought to the proposed deal David described to me on the phone last week and I do not believe I would be able to get the Commission’s vote to support it.”

Initial Terms Negotiation

Knight Outlines Objections to Team Owners’ Initial Offer:

“1) The upfront commitment from the professional team is not adequate to secure the County’s participation in extending the CRA. Based upon my conversations with County staff as well as with Commissioner Edwards and Mayor Jacobs, any commitment to extend the CRA would require “skin in the game” from the team owner. They understand that Rollins money is also private but the reason they would be involved with the deal at all is for MiLB and they want to have confidence that the team is committed. A long-term lease and no upfront commitment will not be enough to get it done. Without the CRA extension, the City’s $5M is not there.

2) The proposal does not adequately address parking in the short term and in the long term commits the City to fund a parking structure. If the City spends its funds on the stadium it will not have a source to fund the parking. Without the parking resolved upfront, I do not believe Planning and Zoning or the City Commission will approve a stadium at that location regardless of who is funding it.

3) Other than having MiLB (Minor League Baseball) and the resulting economic impact for the community, the City gets nothing for its investment. No recurring revenues, no new parkland and no ownership. While I appreciate not being on the hook for future costs or CapX there will be a perception that the City is giving and everyone else is taking.”

Knight then offered a counter-proposal warning “I don’t want to drag this out until August if this [ Freeman’s ] proposed deal is the best we can do. I offer the below proposal that I believe I can in good conscience recommend to the City Commission.”

Knight’s Counter-Proposal Paves Way for Current Deal

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Knight Adds Deal-Sweetener. Freeman Responds.

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Knight sweetened his proposed terms with an offer to share a projected $3.5 – 4 million funding shortfall, saying he “could support recommending that the City put in 1/3rd of the shortfall (with conditions that the parking garage is available during non-game times for other use) if Rollins and the Team find the other 2/3rds either up front or through shared revenues. Otherwise, I think this site is off the table and we need to focus on one of the two sites with developer participation to make up the shortfall.” The next day, Freeman responded:

“If you recognize the $5 million purchase price of the team, your NMTC increases by $1.25 million……and the guy writing that check doesn’t feel as slighted by the skin-in-the-game analysis.

It appears that the bottom-line is the addition of a $6M city-owned parking garage and the request for the team to contribute $2M of that $6M. Not an unreasonable request if the team can find additional sponsorship revenue to recover that outlay.

Below [ city counter-offer ] does not address a solution for the annual lost revenue that the club suffers as a result of smaller, cheaper stadium. Again, maximizing sponsorship revenue appears to be the most realistic path to recovering this foregone revenue.”

The Voice asked Randy Knight whether the city’s contribution of $1+ million “shortfall” money (additional to the $5 million CRA money) would come from the general fund – and, if not, where the city would find the money? Mr. Knight did not respond to the questions.

Path to Gov’t $$$ for Stadium Leads Principals to Tallahassee and Washington D.C.

Email exchanges among the principals over the past month indicate strong interest in tapping multiple government subsidies to secure the stadium deal. On April 2, team owner Tom Winters forwarded this news item to Mayor Bradley, Randy Knight and others:

“House opens the stadium incentive bill to rodeos, minor-league soccer, baseball . . .

TALLAHASSEE — A proposal to give tax subsidies annually to help finance a handful of professional sports stadiums got considerably more wide-open Tuesday when a House panel expanded eligible teams to include rodeos, minor-league baseball, and semi-professional soccer league with a team in Tampa.”

Stadium Tax Subsidy News Story

Rollins Hopes Congressman John Mica Can Help Rollins Seal Stadium Deal

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In a 3/25 email to the principals, Rollins’ VP for Business and Finance Jeffrey Eisenbarth notes that Rollins may be able to tap its Washington connections:

“President Duncan mentioned again yesterday that John Mica would still like to do something for the College but it needs to be “transportation” related. A parking garage is transportation related so we should approach John from a combined City and College perspective and see if he can get us the $6M for the parking garage . . .”

The Voice asked Randy Knight whether principals are still pursuing the Mica “Transportation” funding option. Mr. Knight did not respond to the question.

3/25 Email: Rollins et al Explore Options

Without Mica, Who Will Cover Stadium $$$ Shortfall? Rollins’ VP: “We can do that.”

In the same 3/25 email, Eisenbarth concludes that Rollins can find the funds necessary to close the deal:

“. . . If that does not pan out then we still have your scenario where we can include the cost of the garage in the total project costs which puts us at $30M and 25% NMTC would be $7.5M and we are short $3.5M. David has indicated the value of the team ($5M) should also be included in the NMTC calculations which would get us another $1.25M and you mentioned that the City could cover 1/3 of the $3.5M which would leave about 1/3 for the College to fund. We can do that.”

If Rollins’ Harper-Shepherd Deal Falls Apart, Other Developers Ready to Move Forward

The Harper-Shepherd agreement, if ultimately approved, leaves developer Dan Bellows empty-handed – despite his two-year campaign to have the stadium built in Ravaudage. In Part 2 of this story, we will examine the long, colorful history of stadium negotiations between the city and other developers.

Full Text of Knight Response to Winter Park Voice

Shown below is the full text of City Manager Randy Knight responding to our questions asking for clarification, correction and updating of the information we found in city emails submitted to the Voice last week:

“As you can imagine trying to negotiate a three or more party deal is a very complicated and fluid process. The term sheet dated 4/1 was an attempt by Mr. Freeman to put down points for the purposes of discussion. It was based in part on the many negotiating sessions we have held and also included some new proposals from him. My response was part of the negotiation process. This term sheet has not been agreed to by any of the parties involved. These are working fluid concepts that are constantly changing. You must understand that I do not have the authority to bind the city to any deal. Jeff does not have the authority to bind Rollins to any deal. So we are trying to come to terms that we think we can, in good faith, recommend to our respective boards.

It takes a great deal of trust between negotiating partners that concepts floated to each other aren’t discussed outside of that process until there is some level of agreement. Although they are public records, to have draft term sheets or concepts pulled from emails published in the media that have not been agreed to will be a detriment to the process and our ability to propose ideas to each other for discussion purposes.

So while there are inaccuracies in your conclusions below as well as outdated deal concepts it would be premature for me to comment on them at this stage of the fluid negotiating process. When the parties have a deal in concept that we are ready to bring to our respective boards I will be in a better position to answer your questions regarding the issue.

If, and when there is an agreed upon deal concept amongst the negotiating members there will be several public meetings that include public input where different aspects of the deal are up for approval. Leading up to that process there will be ample time for all of the real deal terms to be shared with the public.”

[ Ed. note: This story has been corrected to reflect baseball principals’ interest in extending the life span of the CRA rather than geographical boundaries as originally reported. ]

 

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