3 Big Lies About the Arena

That plan for the arena was based on three big lies (and a lot of little ones). To wit:

1) El Pasoans wanted an arena.

As David Crowder pointed out in this article in the September 16, 2012 El Paso Inc.

When city officials started asking residents last spring how they would improve El Paso, more than 5,000 comments poured in.

Now a close look at comment cards and a database of all 5,000 responses reveals what could be called cheating, ballot stuffing and maybe even fraud.

Those suspect cards pushed the apparent desire for an arena or stadium to the top of requests for Downtown signature projects, and helped land a $180-million multi-purpose arena on the bond ballot.

2) A downtown arena is a good investment.

Numerous studies have shown that publicly financed arenas are bad investments. From the business friendly Forbes Magazine:

The argument is frequently made that all the visitors coming to spend money at and around sports events will produce enough economic impact to pay for the stadium. This argument falls apart when you realize two key points: economic impact is not the same as tax revenue and when evaluating such events you must account for visitors’ budget constraints.

It is easily possible (and in fact quite likely) that a new stadium will produce more in related economic activity than the cost of any public financing (even if a government pays for all the costs). However, it doesn’t matter if businesses take in more money than taxpayers shelled out to build the stadium; what matters is whether the taxes collected from all that activity are more than the up-front taxpayer cost. A visitor to the Super Bowl might spend $500 on an airplane ticket, $2000 on his hotel, $300 on food, plus $500 on the ticket to the game. That sounds like a lot of economic activity for just one visitor. However, the plane ticket generates roughly zero money for local and state governments (there may be some airport taxes but they will go toward running the airport). The hotel stay probably produces $200-250 in tax revenue, the restaurant bills another $20, and the game ticket another $35. That means the over $3000 in spending really amounts to around $300 in tax revenue.

. . .

On to the second point. When people spend money to go to a sporting event, they cannot just pull that money out of thin air (tragic, but true). Rather, the money comes from their family budget, meaning something else has to give. If I buy tickets to an Atlanta Hawks game, the result of that spending might mean several fewer trips to the movies, not going to a local amusement park, or not going to a local restaurant or two.

3) The Quality of Life bond projects won’t raise our taxes very much.

In this September 30, 2012, El Paso Inc. article titled City CFO: How we’ll pay off big bond debt, the City’s CFO explains how we’ll finance the QoL bonds.

As El Paso taxpayers look ahead to the Nov. 6 quality of life bond election, some are asking how the city can pay for all those projects and everything else without imposing huge tax increases.

The city’s chief financial officer, Carmen Arrieta-Candelaria, confidently says it can.

. . .

The quality of life bonds will be sold not all at once, but over seven to 10 years, starting with $33 million in 2014 with the first payments the following year.

Meanwhile, the city’s older debt will be dropping rapidly.

Over that time, the city’s tax rate, now at 66 cents per $100 valuation, will rise by only 5 cents, she says, peaking for two years before starting to decline.

One of the most tragicomic episodes at the last City Council meeting was when District 5 Representative Dr. Michiel Noe said that his neighbors were complaining that their property taxes were too high, so we needed to build the arena. Huh? Rep. Noe is going to reduce residential tax rates by spending $180 million dollars on an arena?

As ElPaso45 pointed out in a comment on this post:

When the ball park was built, we demolished city hall, which was not on the tax rolls because it’s a municipal building. In it’s place, we get a ball park that’s NOT on the tax rolls, city council bought the Times building at above market value, this taking IT off the tax rolls. They then bought 6 other buildings to house different departments and took THOSE off. So we’ve basically gone from 1 building off tax rolls, to EIGHT!

The wheels pulling the levers think you’re stupid. They think you’ll forget, or that you’ve forgotten. They don’t know that the internet is forever.

Pinocchio image by Grand Parc – Bordeaux, France from France (Pinnochio) [CC BY 2.0], via Wikimedia Commons

Remember, Pinocchio was a lying puppet.