$1.2 billion slush fund for Orioles and Ravens may actually be bottomless – Field of Schemes

There haven’t been many new details about the state of Maryland’s $1.2 billion stadium slush fund for the Baltimore Orioles and crows since it was passed in April and then revealed that the actual spending of the money depended on new leases. But a report from The Center Square, the conservative news service formerly known as the Watchdog, sheds a bit more light on the situation, sort of:

In April, Tom Kelso, chairman of the Maryland Stadium Authority, in an exclusive interview with The Center Square, said he considered the bills “evergreen.”

“We don’t plan to spend $600 million at a time on either stadium, Kelso said at the time. “You would get to that level as projects are designed, developed and built, but it would take several years of upgrading and reinvestment. In a broader concept, reinventing portions of the stadium. Each time there is a new bond issue, the lease should be extended to last as long as the most recent project bond.

“It’s not a one-time $1.2 billion expense. It allows the stadium authority to borrow up to $1.2 million. As these bonds are repaid, this creates the ability to borrow again.

The article ends there, so we still have to read between the lines on a lot of things:

  • If the state doesn’t “plan to spend $600 million at a time on either stadium,” are we to understand that it remains to be negotiated how much money the owners of the Orioles and Ravens would get in exchange for a lease extension? (The MSA has promised to “notify the citizens and taxpayers of Maryland when each agreement is reached and presented for approval”, which, uh, yes, that’s the minimum required by law, to reveal the proposals once aren’t these negotiations more important for public debate, since giving a team owner, say, $500 million for a ten-year extension is very different from $50 million for a 50-year extension?
  • “Every time there is a new bond issue, the lease should be extended to last as long as the most recent project bond.” So the extension of the lease will be based on the duration of the bond financing? That sounds exceptionally stupid – as anyone who’s bought a house knows, how long you take to pay it off is purely a matter of bookkeeping whether you’d get your payments quickly or spread them out over time, and has nothing to do with how long you plan to live there – and would seem to encourage team owners to want as much money as possible in each bond issue, if it requires the same length of lease extension in exchange.
  • “As these bonds are repaid, it creates the ability to borrow again.” So it’s not $1.2 billion in bonds, it’s a permanent revolving fund with a cap of $1.2 billion? Let’s move on to the bill itself:

    Unless authorized by the General Assembly, the Public Works Board may not approve an issue by the Authority of Camden Yards Sports Facilities Bonds, whether taxable or tax exempt, which constitute funded debt by tax if, after issuance, there would be outstanding and the nominal amount outstanding of $1,200,000,000 of bonds for the purpose of financing the preparation, relocation, demolition and removal, construction , renovation and related expenses for the construction management, professional fees and contingencies of sports facilities at Camden Yards.

    That’s indeed what it seems to be saying, then, but it’s not at all clear what limits, if any, the MSA has on issuing bonds as long as it doesn’t have more than 1, $2 billion in outstanding stadium debt. (Presumably he can’t sell more bonds than he can bring in with the lottery proceeds, can he?) So there’s no easy way to tell precisely what the size of the Orioles and Ravens stadium slush fund, but “over $1.2 billion, possibly a lot more” seems like a reasonable conclusion.

So there’s good potential here — the state of Maryland has yet to commit to spending $1.2 billion on renovations to Orioles and Ravens stadiums — and bad potential — the spending limit of the state for both teams isn’t actually $1.2 billion, it is, apparently, heaven. Again, if there are any reporters still roaming the Baltimore area who are allowed to write about the real news, it would be worth investigating further, preferably before the endless pipeline of money does fall into place.

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