Tom Firey: How Hagerstown should fund a stadium

August 28, 2013|By TOM FIREY

Fredericksburg, Va., officials announced last week that they’ve crafted a new proposal for building a stadium that would become home to the Hagerstown Suns. The announcement caused great turmoil in Washington County where some local leaders want to build a taxpayer-financed stadium in downtown Hagerstown.

It’s unclear whether the Fredericksburg plan will come to fruition. An earlier proposal was abandoned following taxpayer outcry against using public money for the stadium. Initial reporting on the new plan indicates that, instead of using tens of millions of tax dollars to build the stadium, the city would use millions of tax dollars to build a parking lot for a privately built stadium and then give the stadium owners tens of millions of dollars in tax breaks. Fredericksburg residents may see little difference between the new deal and the old.

Regardless of what happens in Fredericksburg, there’s a growing desire among Hagerstown leaders to build a downtown stadium for the Suns. Last week, city councilman Don Munson announced that he was joining Lewis Metzner and Martin Brubaker in a council majority favoring the project.  My fellow columnist Art Callaham devoted two recent columns to arguing for the stadium project. The local Economic Development Commission has endorsed the stadium, as has the head of the Chamber of Commerce. The Herald-Mail has repeatedly editorialized in support of the project.

Those proponents believe a downtown stadium will boost the local economy. If they’re right, then the stadium will be unlike the majority of stadiums built over the last few decades.

Microeconomists have repeatedly examined the economic data of communities with new stadiums and relocated teams, trying to find positive economic effects. The studies look at such factors as local income, employment, sales tax revenue and consumer spending. The overwhelming majority find that, in general, there is (at best) no positive effect from new stadiums and sports teams, despite looking at many stadiums and teams over long periods of time. A few studies do find positive effects in a minority of specific cases, but negative or no effects in the rest. Overall, the research leaves readers skeptical of stadiums as stimulus.

How can that be, given all the glossy reports commissioned by teams and local politicians, showing large positive effects? Some of those reports look only at changes in the stadium’s immediate neighborhood and ignore the effects on the broader community, despite economic research showing that teams and stadiums merely reroute a community’s entertainment spending rather than stimulate new activity. Other reports simply assume there are positive benefits of various magnitudes, and then calculate the benefits based on that assumption.

Notice the difference between the economists’ studies and the glossy reports. The reports are written before a stadium or team is in place, and they theorize the effects. The economic studies look at actual data from before and after the appearance of a new stadium or team, and try to determine what effect — if any — occurred. Given that difference, the economists’ work seems far more trustworthy.

Though economic research finds no positive effects generally, or positive effects in a minority of instances, it’s possible a downtown Hagerstown stadium could be one of those special cases with a positive result. That suggests a way to build a publicly financed stadium in downtown Hagerstown.

As noted, it’s broadly understood that the positive benefits from stadiums and teams are highly localized. Thus, if a downtown Hagerstown stadium would yield public benefits, those benefits would go to downtown property owners, while property owners and businesses outside the downtown would experience negative effects. It thus makes sense that the downtown property owners — and only they — pay for the new stadium. A special tax should be levied on properties around the proposed stadium site to fund its construction, operation and maintenance. That tax would not only be fair, but would give those taxpayers strong incentive to involve themselves in the project, increasing the likelihood of its success. This would follow some sound advice about public finance: People should get what they pay for, and pay for what they get.

Above, I listed a number of political and community leaders who’ve declared their support for the stadium. If they believe in this cause, then they should take the lead in designing this special stadium tax. I look forward to reading their proposal.

Thomas A. Firey is a senior fellow with the Maryland Public Policy Institute and a Washington County native.

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