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Some time down the road, maybe 10 years, maybe 20, some promoters for a new sports coliseum or arena will try to convince San Antonio’s taxpayers that a large subsidy will pay off for the city.
It may be the Spurs when their current arena is deemed outdated. It may be a football team, a baseball team, or a Major League Soccer team. One thing I can predict with historical certainty: Taxpayers will be told that the new facility will spur an economic bonanza, both in jobs and in development around the facility.
In 1989, a study by Waco economist Ray Perryman, based on data provided by the San Antonio Chamber of Commerce, predicted that the Alamodome would produce 6,000 full-time jobs, even if it didn’t attract an NFL team.
The Alamodome’s full-time staff is a few dozen, though Perryman contends it is responsible for job growth in the broader community. Other economists scoff, noting that San Antonio’s urban growth is part of a national trend fueled by an array of complex factors. Attributing a significant portion of that growth to a single building is absurd.
In 1998, looking to get out of the oversized Alamodome, the Spurs partnered with the developers of the Quarry shopping center to propose a new arena at the abandoned Longhorn Quarry north of the airport.
Construction bonds would have been funded by a “tax increment district” extending out miles from the arena. That meant any increase in property values from future development in that very large district would have been attributed to the new arena and used to pay off construction bonds. The area was already growing due to other factors, but the City, County, and most of all the North East Independent School District would have lost for decades the growing property tax income to the new arena.
Due to a quirk in the state’s byzantine school funding law the largest loss, that by the school district, would be reimbursed by the state. Nevertheless, the NEISD school board killed the deal by voting against it under heavy public pressure.
Then came the proposal for what would become the AT&T Center on the East Side. After Mayor Howard Peak expressed little enthusiasm for heavily subsidizing a downtown arena, County Judge Cyndi Krier took advantage of a quiet change in state law to fund the new arena next to the Freeman Coliseum with county funds generated by taxes on the tourism industry. That group had less lobby power at the county level than it did at City Hall.
After a meeting in which Krier boasted of the economic development the new arena would bring to the chronically impoverished East Side, I approached her and asked why she thought it would cause economic development near it.
Look at the Alamodome and the new neighborhood of affordable homes that had sprung up next to it, she said.
She was referring to Historic Gardens, a project backed by City Hall to fulfill a promise that the Alamodome would have benefits for Eastside residents.
I asked Krier if she knew how much the city admitted to subsidizing with federal funds each of those $65,000 homes? She said she didn’t. I told her it was $117,000. It wasn’t the Alamodome that produced those homes, I said. It was federal money. (I have confirmed the $65,000 sales price but not the exact $117,000 figure. It is clear, however, that the project was heavily funded through federal grants.)
The reality is that the AT&T Center has caused little, if any, development. This is not unusual. Like casinos, many sports facilities encourage their customers to spend all the evening’s entertainment money inside the building, providing food, drink, and souvenirs.
There are a few examples – Pittsburgh is one – of cities that have built sports facilities as part of a larger, well-thought-out plan that actually does result in economic development. But these are rare.
Politicians aren’t the only ones who have bought the notion that sports venues are automatically economic generators. Some prominent business people do as well. Zachry Corp. invested heavily in St. Paul Square when the Alamodome was built just west of it.
The area had once thrived when its Sunset Station was a bustling hub of intercity railway transportation. And it had a modest revival after the Alamodome was built with restaurants such as Ruth’s Chris Steak House and Aldaco’s moving in, but they are long gone. The Alamodome has not been a lasting catalyst for the area, and not just because the Spurs quit playing roughly 50 games a year there.
What brings all this to mind is that a new group of developers with ambitious plans has now made a major investment in the area, including the purchase of several buildings from Zachry Corp. and the City. This group is composed of sophisticated and experienced urban developers, Michael Jersin and Don Thomas of Reata Real Estate and David Adelman of Area Real Estate.
The old Golden Rule of real estate is “location, location, location.” But Adelman also stresses the importance of timing. And time has brought considerable change to the near East Side in the 26 years since the Alamodome opened.
The city’s ambitious “Decade of Downtown” has generated development beyond the downtown core, including the burgeoning of Southtown, the spectacular success of the Pearl to the north, and gentrification in all directions.
The construction of hotels and high-rise condos in St. Paul Square and the infusion of high-income homebuyers in adjacent neighborhoods are transforming the market. Plus the advent of Uber, Lyft, and electric scooters have substantially pierced the formidable barrier of Interstate 37.
Because of these factors and because of the sophistication and demonstrated skill of these developers, there’s a real possibility that they will succeed. As with the developments on the other edges of downtown, such success will pose some of the problems of gentrification, making the City’s efforts to ameliorate the displacement of low-income residents even more urgent.
But that’s not the only concern I have. I’m worried about the public’s memory. I don’t want future boosters of sports facilities to succeed with an almost inevitable pitch along these lines: “Look at the Alamodome and what it did for St. Paul Square!”