Stadium financing plan circles the bases

Aerial view from rooftops beyond left field with James White Parkway lanes in background.

As the Compass headline so aptly stated: “Triple Play Completed”

The new financing plan for Knoxville’s multi-use stadium cleared two government bodies and a sports authority this week, so that the project can continue to move forward.

The first hurdle was cleared Aug. 22 when County Commission, which had discussed the new plan last week in a work session, unanimously approved it with no need for additional discussion. The next morning on Aug. 23, the Knoxville-Knox County Sports Authority also granted unanimous approval. Completing the triple play later that evening at City Council took, in baseball parlance, extra innings with hours of discussion to clear the third hurdle.

In the end, City Council voted 6-2 to approve the new financing plan, which expands the tax increment financing (TIF) district in the Magnolia Avenue Warehouse District to repay the up to $20 million that Boyd Sports owner Randy Boyd will lend to the project and $14 million in infrastructure improvements borne by the city. The expanded TIF will generate additional property tax revenue with the city getting paid first.

“From the very beginning of the stadium project, I’ve said I will support this if the benefits to the people of the city of Knoxville outweigh the costs to the people of Knoxville,” Knoxville Mayor Indya Kincannon said in the Compass story by Scott Barker that can be read HERE. “The bottom line is, this is a good deal for the city of Knoxville.”

The new plan became imperative because of the crunch of inflation and escalating construction costs, especially steel, that caused the original cost estimate of $80.1 million to build the new stadium to be outdated. That meant County Commission, Knoxville-Knox County Sports Authority and City Council had to revote on the matter.

Boyd has pledged the loan to cover the gap between the $80.1 million and the new cost when the stadium project’s budget is finalized later this year. Additional stadium funds include a $13.5 million state grant, $65 million bond issue, $6 million previously committed by Boyd and the new loan of up to $20 million. Boyd also has provided the land for the stadium at an estimated value of $10 million.

This News Sentinel story by Ryan Wilusz noted: Knoxville and Knox County bond attorney Mark Mamantov told Knox News the $20 million figure allows for “tons of head room” because officials do not think the full amount will be needed.

The sticking point for City Council involved cost overruns with three councilmembers pointing out that Boyd has promised to pay for cost overruns. In journalism, the term of trying to explain something that is replete with arcane details and minutiae that will bore a reader is called “inside baseball” and is verboten. But, in this case it is inside baseball so here goes, though “cost overruns” may be like trying to explain a balk or the infield fly rule.

For cost overruns to occur, a final budget must be set, and the development agreement between the two bodies – in this case Boyd Sports and the Sports Authority – must be signed. Neither has happened yet. There can’t be any cost overruns until the guaranteed maximum price of the construction contract has been determined.

Councilmember Lynne Fugate explained it well and noted a 20 percent price spike in construction materials is an unforeseeable event.

“Until you have a contract you don’t have a price,” she said in the Compass story. “Once you have a contract, you have a price and cost overruns.”

Boyd has agreed to pay all overruns once the contract is finalized and signed. It’s inside baseball. And also accurate. The $20 million also is the max of the loan.

“In other words, if the (gap is $5 million), which that’d be a really great day, that’s all we would borrow,” Mamantov said in the News Sentinel story.

That gap number should be available by the end of 2022, and stadium construction could start at some point in 2023. That means baseball should be back in Knoxville for the 2025 season.

(UPDATE: The park cleared four hurdles after the Board of Commissioners of Knoxville’s Community Development Corp. voted Aug. 25 to expand the TIF district. KCDC manages redevelopment districts for the city.)

In the meantime, enjoy the final two series in the 2022 regular season for the Tennessee Smokies in Kodak. This Saturday, Aug. 27, is “UT Night” with a bobblehead giveaway of Vols quarterback Hendon Hooker and the players donning special “dark mode” jerseys to be auctioned as a fundraiser for The Pat Summitt Foundation.

The Smokies are hosting the Rocket City Trash Pandas, and Vol baseball fans will recognize Ben Joyce, who came out of the bullpen on Tuesday for the visiting team, hit triple digits on the radar gun and didn’t allow any runs. UT Night was planned months ago and how fortuitous that Joyce, who joined the Trash Pandas after being drafted in July, will be at the stadium.

See y’all at the ballpark.