Whatever the Austin City Council decides to do in its negotiations regarding a proposal to bring Major League Soccer to Austin, it should check two boxes: Be on firm legal ground with the letter and the spirit of state law, and fairly compensate taxpayers in the way of direct benefits akin to the arrangement the city has with the Austin City Limits Music Festival.
That is why it’s a good idea for the city to immediately clear up new questions raised by Austin lawyer Bill Aleshire about whether the proposal for a professional soccer stadium on city-owned land violates state law.
It also would be wise for Precourt to sweeten the deal for taxpayers.
In a letter sent this week to City Attorney Anne Morgan, Aleshire stated that the city cannot lease, transfer or give away McKalla Place to Precourt Sports Ventures under state law unless the city receives compensation, totaling more than $18 million, or uses the land for a purpose consistent with its owner – Austin Water.
“Based on what information has been disclosed publicly, the City of Austin is on the verge of violating laws that prohibit property acquired with water utility bonds for specific use by the utility to be leased to one who would devote the premises to an inconsistent use,” Aleshire wrote in the letter to Morgan.
“McKalla Place is an Austin Water Utility asset purchased and improved with water bonds paid by Austin water utility customers. A soccer stadium is not a water utility use.”
If that is true, it throws a curve ball (excuse the baseball metaphor) into professional soccer stadium negotiations, which already are raising concerns about whether Austin is getting a fair deal, or as Council Member Ora Houston has said, “giving away the farm.”
I contacted Morgan, the city attorney, for a response.
“We did advise our council in executive session,” she told me via email. “While I cannot disclose what we advise in executive sessions, I can tell you that if council asks the city to go forward with negotiations regarding McKalla, we will explore and address the issues raised by Mr. Aleshire.”
In a unanimous decision Friday morning, the council directed City Manager Spencer Cronk to analyze Precourt’s proposal and begin stadium negotiations. In a separate action, the council passed a resolution seeking alternative proposals for McKalla Place.
At this point, few – including myself – can determine the legitimacy of Aleshire’s assertions or whether they have any merit at all. The city is in the best position to clarify those matters and should do so publicly to limit speculation that is likely to cloud or confuse matters regarding the use of McKalla Place for professional soccer or, for that matter, other purposes, such as a mixed-use development. To allow such questions to simmer without clarification is unfair to the water utility and its users, Precourt and the public.
Aleshire asserts that state law prevents the council from selling McKalla Place to Precourt without taking competitive bids. He did say, however, the council does have authority to use the land for a purpose consistent with the water utility – a stipulation he joked isn’t satisfied with a few rain water collection barrels or low-flush toilets.
Matters might end up in court, Aleshire told Morgan, unless the city sheds light on the legal questions raised by using property owned by Austin Water for sports or entertainment purposes.
Again, this is speculation, but if Aleshire’s assertions do have merit, it would seem that the city would have methods to make the water utility whole, clearing the way for soccer or other uses of McKalla.
Aleshire’s caution should not be taken lightly. He prevailed in a previous legal skirmish with the council regarding the city’s attempt to grant water utility fee waivers to the Pilot Knob housing development, getting the council’s action reversed and declared void.
Those new legal questions come as Austin City Council members are in talks with Precourt about its proposal to lease the 24-acre McKalla property for $1 a year. The initial terms of the agreement would cover 20 years, but with options that permit Precourt to renew under the same terms, the contract could run 80 years.
Precourt has proposed financing the construction of a $200 million stadium on the site for its Columbus Crew, SC, which it wants to relocate to from Columbus, Ohio, by year’s end. Because the property – including the stadium — would be owned by the city of Austin, Precourt wants a deal that would exempt it from paying property taxes to the city, Travis County, Central Health, Austin Community College or financially-strapped Austin Independent School District.
Some on the council have downplayed such taxpayer subsidies, arguing that the economic and social benefits Major League Soccer would yield for the city outweigh other financial considerations.
That argument ignores the fiduciary responsibility of council members to consider the highest and best use of a public asset — prior to a decision. That doesn’t mean a soccer stadium isn’t the best use, but that can’t be determined in a vacuum.
That is especially true, given city records provided by Aleshire.
Austin Water, the city’s water utility, purchased the property in 1995 for $1.4 million, city records show. That distinction requires the city to at least recoup the utility’s $18,261,323 investment over time.
So far, Precourt’s offer, while significant in benefits to Austin’s private business community and the city’s overall economy, does not provide direct or meaningful compensation to Austin Water, those who pay fees to the utility, or city taxpayers.
As the Statesman’s editorial board has said, the proposal deprives students and families in Austin district schools and ACC of badly-needed tax revenue the city likely would realize from other private developments that paid property taxes to those jurisdictions.
Precourt seems to be getting the message. This week it announced it would build up to 130 units of affordable housing on the site with a parking garage. The details are sketchy, but that would be a solid benefit to taxpayers, helping Austin deal with its Austin’s affordability crisis.
If the sports franchise wants to win over critics, it should look to the city’s arrangement with the ACL Music Festival in which the private venture uses Zilker Park to stage its festival two weekends a year, though preparations and clean up limit park use for weeks before and after the festival.
The city gets a solid return from ACL: Since 2006, ACL has contributed over $26 million to the Austin Parks Foundation for improvements to parks, trails and green spaces – and in 2016 alone, it donated $6.3 million for maintenance and improvements to hundreds of city parks. ACL also pays for the yearly restoration of Zilker Park’s Great Lawn.
Major League Soccer might well be a Kumbaya enterprise for Austin; might boost the city’s cool factor. Even so, the council should put its game face on and get the best deal for Austin Water users and taxpayers.