What is in the Rays-Hillsborough College MOU?

We’ve known for some time that the Hillsborough College (HC) Dale Mabry site was the leading candidate for a potential Tampa Rays stadium, and on Tuesday the HC board unanimously approved a Memorandum of Understanding (MOU) authorizing the college to pursue a partnership with the Rays. Now, thanks to Neil deMause of Field of Schemes, we now have access to the nonbinding Memorandum of Understanding between Hillsborough College and the Tampa Bay Rays.

While the Field of Schemes report on this MOU includes speculation about what the Rays COULD, and indeed probably WILL, request in funding, this MOU tells us little about any financial obligations. For now we will stick to what the agreement actually says, so here are some highlights.

With the caveat that we’re not lawyers or a real estate experts, from what we see this agreement largely outlines how HC and the Rays will work together, most notably during what will be a disruptive construction period. And even here the language is vague, referencing a future final MOU that will contain details. For example:

There are few references to financial arrangements. It seems as though the Rays will have a 99-year ground lease from HC for the development, but that the stadium itself, if it includes any public subsidy, will be owned by the county:

Pursuant to the terms of the Definitive Agreements, HC will ground lease the entire Property, except for the College District, to the Rays or a Rays’ affiliate by long-term lease of not less than 99 years …. and the Rays or the Rays’ affiliate will accept such lease from HC. Notwithstanding the foregoing, HC acknowledges that Hillsborough County (the “County”) will require that the Stadium be conveyed to the County as a condition to any public financing relating to the Stadium Development.

The public ownership of the land would exempt the Rays from tax obligations on both the stadium and the mixed-use development. But there are no actual details about the financial terms of the lease, including either rent payments or county access to revenue streams, so we cannot yet make a judgement about the size of the subsidy.

Other financial references say that the Rays are responsible for predevelopment costs, permitting, and that:

The Rays will pursue various economic incentive programs at the local and state levels in connection with the Project (“Economic Incentives”).

As yet there are no specifics given about what subsidies, incentives, and other public funds will be pursued, but that will need to be spelled out next for the process to move forward.

One part we found amusing: the agreement lays out some restrictions on the sorts of businesses that can “have a presence” in the development, which I assume means either have retail outlets or advertising, out of concern there would be businesses that would blemish college’s reputation. Such disreputable businesses include

adult entertainment, gambling, cannabis sale, beneficial ownership by a Foreign Entity of Concern as set forth in Florida law

This is interesting since MLB has created partnerships with gambling sites. But then comes this line:

provided that the Rays will be permitted to advertise any product that is approved by Major League Baseball

So looks like gambling ads are safe!

In sum, this MOU is not terribly illuminating. For one, it’s nonbinding, so anything in it can be altered with few legal penalties. Second, much of it spells out intentions regarding the shared use of the space with the college. Development details are yet to come.

The real financial asks are ahead of us, and they could well add up to $1 billion. We assume the Rays and their supporters will try to ensure that much of the public subsidy is in the form of tax abatements and under-market leasing fees that can be negotiated quietly, as opposed to cash hand outs.

There are some other sources of financing that escape most public scrutiny as well. Field of Schemes mentions that the stadium could be eligible for a state professional sports facility subsidy which is worth $2 million a year.

The site is also within the Drew Park CRA, and so there is already a Tax Increment Financing district in place, which could generate additional revenue.

We also assume that there will be considerable county and state investment in the infrastructure needed to support this development, which is also a type of subsidy, but one that is inherent in any stadium buildout.

As an aside, given the demonstrated preferences of current county and state leadership, doubt that much public investment will go toward expanding transit options, but part of the allure of this site is that much of it is currently filled by parking lots, so the upside comes from a more efficient use of that space, and a better transit and parking plan.

These various sources are still going to leave a gap that the owners will look to plug with local contributions, and that is most likely a steep hill to climb. The financing here is most assuredly not what was available in the previous stadium agreement in St. Petersburg. Pinellas County is awash in hotel tax funds that can be used for a stadium, but cannot be used to cover aspects of the county budget not legally linked to tourism; Hillsborough County collects a lot less revenue from their hotel tax, and they have already committed most of it to the Lightning and the Convention Center.

This MOU is the first slipper. There are several boots left to fall.

Update: we see the first financial request related the project. Axios has reported that Senator Danny Burgess (R-Zephyrhills) has filed a bill asking for $50 million for HC. The larger plans aren’t mentioned; the bill requests funds for “college improvement projects.”