Grumet: Austin should look to LA, where an MLS team pays property taxes

The new Los Angeles FC stadium opened this spring — and it plans to pay property taxes. Photo by Harry How/Getty Images

I recently noted that property-tax free stadiums tend to be the norm in the professional sports world, and we know that Precourt Sports Ventures wants just such a property tax-free deal in Austin. If Austin moves forward today with negotiating a Major League Soccer stadium at McKalla Place, however, it might find some useful lessons in Los Angeles.

The Los Angeles FC’s fancy new Banc of California Stadium just opened this spring on government-owned land. And it’s going to pay property taxes.

“There was never any issue about property taxes being charged or not,” Seth Burton, LAFC’s vice president of communications, told me late Wednesday via email, responding to questions I’d sent earlier. “The stadium is a private development and did not request or need property tax defrayed.”

The Los Angeles FC stadium seats about 22,000, a shave above the 20,000-seater that Precourt Sports Ventures proposes to build in Austin. It’s worth noting the LAFC stadium has other bells and whistles that brought construction costs to $350 million, well beyond Precourt’s $200 million stadium budget in Austin (I don’t have the details on the Carson, Calif. stadium that’s home to LA’s other team, the LA Galaxy). LAFC fully financed its stadium construction, just as Precourt proposes to do.

Editorial: Negotiate MLS stadium deal on Austin’s terms, not Precourt’s

Both stadiums also involve government-owned land. Burton told me the LAFC stadium sits on state-owned land that is being subleased from the University of Southern California. Precourt wants to build its stadium on the 24-acre McKalla Place tract owned by the city of Austin, which the franchise seeks to lease for $1 a year.

But here’s a key distinction: When the construction dust cleared, LAFC retained ownership of the soccer stadium it built and plans to pay property taxes on it. The first bill hasn’t come due yet, so Burton couldn’t provide a dollar amount. “The process to determine the amount of taxes is ongoing,” he said, which is not surprising, considering the challenges involved in appraising a sports venue for tax purposes.

In Austin, Precourt has proposed giving the stadium it builds to the city. This city-owned facility would remain off the tax rolls, much like the city-owned stadiums used by FC Dallas (technically based in Frisco) and the Houston Dynamo.

The property tax question is just one piece of the puzzle for Austin officials to figure out if they proceed today with Precourt. It’s possible some other combination of benefits makes better sense than putting the stadium on the tax rolls. But it’s instructive to know there’s a place where an MLS team pays property taxes without flinching.