The Austin Chronicle

Precourt’s Plan for McKalla Place

Terms set with city staff, McKalla’s fate moves to Council

By Austin Sanders, August 3, 2018, News

After four weeks of negotiations, representatives from the city and Precourt Sports Ventures have agreed to a set of terms for a potential deal to bring the Columbus Crew to Austin. Highlights of the revised deal include an increase in the rent paid for use of the city-owned McKalla Place site from $1 per year to $550,000 per year, beginning in the sixth year of the deal. (PSV would still forgo paying property taxes on the land.) Eight acres of the site would be devoted to green and open space available to the public year-round, with an additional acre reserved for affordable housing. Although the new terms don't require PSV to pay for the construction of that housing, PSV is still committed to contributing funds to local housing nonprofit Foundation Communities.

The $550,000 in rent comes after skeptics of the deal called for PSV to pay more for land that a previous appraisal had valued at nearly $30 million. PSV's Austin-based lobbyist Richard Suttle said the rent would help offset costs incurred by the city in improving off-site infrastructure (estimated by city staff to be about $5 million, not including $13 million for a new MetroRail station) and public safety needs during events held at the stadium. But the city would also be required to deposit $437,500 in years six and seven of the initial term into a "Capital Repairs Reserve Fund" (and then $125,000 each year for the life of the deal), while PSV would deposit $125,000 annually into the same fund. Critics of the deal noted that the required contributions from the city would virtually cancel out the rent payments from PSV, but city staff said they negotiated higher rent based on city investment into the reserve fund.

Notably, a "non-relocation agreement" aimed at preventing the team from abandoning the city and the $200 million stadium during the term of the lease (now 20 years, with options for renewal in 10-year increments) is mentioned in the term sheet. Specifics for how the clause would be enforced are not mentioned, however. Suttle said Monday that those details – along with other specifics relating to the lease agreement and contracts set up with to-be-established entities controlling the team – would be settled by a new deadline, Oct. 9.

Suttle stressed that the fall date did not mean the city had another two months to continue negotiations with PSV. "We did a very detailed and elaborate term sheet that's heavily negotiated," he said. "On Aug. 9, Council should vote on the term sheet and authorize the city manager to negotiate documents that are consistent with the term sheet." Suttle said the vote scheduled for City Council's Aug. 9 meeting would be critical to showing the MLS bosses that the city is committed to bringing a team here, which would allow PSV to move forward with plans to play the 2019 season in Austin, as well as begin spending money on stadium development.

But questions from skeptical members of the dais remain. Leslie Pool said Tuesday that she saw the revised terms as still being a "massive giveaway" to a for-profit business. She said the increase in rent wouldn't have much impact for taxpayers, because PSV would still avoid paying property taxes. "The value to the community is not there in any appreciable, actualized way," Pool said. "The taxpayers of Austin are still subsidizing a wealthy man's sports team." Despite her continued skepticism, Pool reiterated that her position is not anti-soccer – she's looking for a deal "that is best for the city, not the soccer team." She said she intends to vote no on Aug. 9.

Pool also said she's working on adding an agenda item to the Aug. 9 meeting that would call for an up-or-down vote on taking the entire deal out of the hands of City Council and putting it before voters as a ballot measure. If that effort fails on the dais, the seasoned petitioners at IndyAustin are prepared to make the stadium deal their new cause. Group organizer Linda Curtis said Monday that she'd be watching discussion at this Wednesday's Council meeting to see if there's enough support among CMs for a ballot initiative to make a petition drive unnecessary, so the group might not "pull the trigger on a drive last-minute." PSV reps have said that if this becomes a ballot measure, it would "kill the deal," because of the tight timeline MLS has pushed for if Precourt is to move the team.

Modifying the deal terms to include additional funding for Capital Metro emerged as a key point after Wednesday's special called Council meeting. On Tuesday night, Delia Garza posted on the Council message board calling for $3 million in new funding from PSV – plus a $1 surcharge on tickets and the allocation of $2 million from rent payments – for the transit authority to use for enhancing existing bus lines, building a new rail station, or "how they see best supports the agency." Ann Kitchen and Greg Casar agreed with a push for more Cap Metro funding, but Suttle said it would be tough for PSV to find the money. "Basically, the city already wrung every dollar out of us they could," he said Wednesday. "We could reallocate the money, but there isn't room in the budget for new funds."

Meanwhile, alternate options for McKalla have begun rolling in. On Tuesday, Capella Capital Partners proposed two plans to the city for a mixed-use development on the site, and on Wednesday Whitfield-Chen published a website that features that group's mixed-use plans. Council will meet Tuesday to talk about those options (and potentially others like them), prior to next Thursday's vote.

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