Funding Proposal on the Table in St. Louis

St. Louis MLS stadium rendering

A funding model for a proposed MLS stadium in St. Louis is taking shape, as two related bills would address some essential details.

The push for an MLS stadium and expansion franchise has gathered momentum recently, as the city is working with the group SC STL on a proposed facility near Union Station. Funding for the project could include state tax credits and a contribution from the city, but the exact source of the city’s share of the stadium has not been finalized.

However, the city is now set to consider two bills that, in cooperation, would identify funding sources for the project and clear the way for a voter referendum. The first piece of legislation is Bill 227, and it calls for an Economic Development Sales Tax. That would lead to a 0.5% tax increase on retail sales, with the revenue being redirected toward certain projects, including infrastructure and anti-crime measures.

That would, in turn, trigger a domino effect, setting the stage for a use tax increase that would help fund the stadium. The use tax increase cannot take place without the passage of Bill 227 but, if it comes to fruition, it would pave the way for both increases to be considered in referendum votes. More from KMOV:

If the sales tax increase is passed, the city use tax will increase by the same amount. The use tax is paid by local businesses when they purchase goods from out of state, essentially acting as a local sales tax on items that would normally be exempt.

Voters do not vote on use tax increases, and normally do not vote on how revenue generated from use tax increases is spent.

But Bill 226 asks voters to decide on whether or not part of that money will be allocated toward the construction costs of a new MLS stadium. The language in the proposition rolls the funding of the stadium in with job training and business development, linking the two in one proposition.

“Shall the use tax paid by businesses … be used for the purposes of minority job training and business development programs, and a portion of the construction costs but not construction cost overruns, of a multipurpose stadium for soccer, local amateur sports, concerts and community events.”

To clarify, none of those funds would exist without the passage of the sales tax increase proposed in Bill 227. Essentially to fund the stadium, the use tax must increase. To increase the use tax, the sales tax must increase.

Previous estimates have suggested that the City of St. Louis will contribute $80 million for the stadium project, which is expected to cost about $205 million. The voter referendum would take place in April, but these bills—which will be presented on Friday and must be signed by January 24—must pass for that to occur.

In addition, the city is requiring that SC STL secure an MLS franchise and agree to a 30-year lease. Among the other stipulations in place are those that call for the group to cover any cost overruns during the construction process, and to cover maintence costs over the duration of the lease. SC STL officials expressing satsifaction with this end of the proposal. More from the St. Louis Post-Dispatch:

SC STL spokesman Jim Woodcock said Wednesday that the ownership group was happy with the proposals and willing to go along with the city’s terms.

“Our group’s objective was to balance any risks inherent in bringing a startup MLS team to St. Louis,” Woodcock said. “Public interest in this justifies the investment.”

This article first appeared in the weekly Soccer Stadium Digest newsletter. Are you a subscriber? Sign up here for your free subscription!

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