Expert: San Antonio voters could reject additional Project Marvel bonds if economy hits slump

The Spurs’ Peter Holt initially said the SAWS Chiller plant and his new arena were separate issues. Neither the city nor SAWS has backed up that statement. Credit: Sanford Nowlin

Last week, voters narrowly approved a public financing package for a new $1.3 billion arena for the San Antonio Spurs at Hemisfair.

But it’s not a done deal yet.

Indeed, the project faces another vote, this time on a bond package for necessary infrastructure improvements at Hemisfair. That election will likely be in May, and taxpayers will be on the hook.

What’s more, it could be harder sale at the ballot box, especially if the economy slides into recession, UT-San Antonio political science professor Jon Taylor cautioned.

“One of the biggest problems they face is that we do not know how bad this economy is going to get between now and May,” Taylor said. “How are you going to be able to sell voters on a half-billion-dollar bond proposal that will raise taxes or cost the city money in the face of likely city budget deficits? Will the mayor be on board with it?”

Bexar County Voters last Tuesday voted 52%-48% in favor of Proposition B. The measure, which the Spurs spent pat least $7 million promoting, passed by just over 10,000 votes. With its approval the county’s visitor tax rises to 2%, and $311 of that additional revenue will go to financing a new basketball arena for the city’s NBA franchise.

“It’s a win, but it’s not a mandate by any stretch of the imagination,” Taylor said of the election results.

The approval of Prop B also means the city’s $489 million contribution, financed through captured property-value tax increases and state sales tax via a Tax Increment Reinvestment Zone (TIRZ) and a Project Finance Zone at and around Hemisfair, will move forward.

However, not all the components have fallen into place yet.

The final piece to the Project Marvel puzzle is a city infrastructure bond that will be put to voters in May.

The bond, initially estimated around $250 million, was to cover traffic-signal improvements, highway-ramp expansions and a new parking garage at the Alamodome, among other projects, KSAT reports.

However, the bond now may rise as high as $500 million as city leaders acknowledged that San Antonio Water System’s downtown chilling plant may need to be relocated to make way for the development. And, unlike the campaign for the new arena, the city and Spurs can’t tell taxpayers that only visitors will be on the hook, Taylor said.

“The things that get hit first [in a recession] are tourism and conventions,” Taylor said. “So, the prospects of getting a bond passed and convincing people that in a recessionary economy this is a good thing to do — instead of being more prudent with taxpayer money — is a hard sell and an uphill climb.”

Indeed, the Express-News reported Monday that $1 million in repair work is needed at the chilling plant located across from the Henry B. González Convention Center, between Market and Commerce streets.

That revelation comes as the city and SAWS considering moving the chilling plant to make way for a convention center hotel.

City officials initially said the proposed 20,000-square-foot hotel could serve as UT-San Antonio’s School of Hospitality. However, that idea hasn’t been explored further since it was floated during a City Council meeting last November.

Moving that plant could cost an additional $200 million, as reported by the Express-News, which would bring the total infrastructure improvements cost to somewhere between $400 million and $500 million.

Spurs Managing Partner Peter J. Holt said during the San Antonio Report’s CityFest last month that the proposed basketball arena and the SAWS chiller plant were “two separate issues.”

However, SAWS officials told the Express-News in April that the current system’s capacity would need to be increased if new facilities, including a new NBA arena, were to use the plant for cooling.

Neither the city nor SAWS has responded to the Current’s request for comment about whether the existing plant could service a new arena or surrounding economic development at Hemisfair pledged by the Spurs.

Regardless, Taylor said most voters were unaware of the additional price tag, and their skepticism would likely rise further if the economy cools. That could lead to another expensive campaign for the pro-Project Marvel coalition, he added.

“You can make the argument that this will build out our tax base and generate revenue, but there’s no real promise that will happen,” Taylor said.

Additionally, since the bond election will be a citywide vote, it could be harder to secure the necessary “yes” ballots to move forward with the project, since Proposition B was carried by affluent enclaves on the far North Side and Alamo Heights, none of whom can vote in city elections, Taylor added.

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Expert: San Antonio voters could reject additional Project Marvel bonds if economy hits slump

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