Opinion: Carolina Journal Opinions

Toxic Brew for Taxpayers

Government isn’t run like a business. It does, however, often offer aid — politely called “incentives ” — to businesses. And that can be a toxic brew for taxpayers, especially if local governments don’t engage in the same sort of due diligence that a well-run business would. Winston-Salem’s involvement in building a new minor league baseball stadium highlights the problem.

Billy Prim and Andrew “Flip” Filipowski were the owners of the Winston-Salem Class A baseball team, which is now know as the Dash. They wanted to build a new stadium but didn’t have the financial resources to pull it off. So they went to the city for a cheap loan. The city agreed in November 2007 to provide $12 million toward the then-projected $22.6 million cost of the 5,500-seat facility.

The new ballpark didn’t end up costing $22.6 million; the actual cost is currently projected at $40.7 million, plus an additional $8 million for land paid for by the city.

Earlier this year, Prim, by then the Dash’s sole owner, sought additional public assistance to finish the project. In June, the city agreed to provide another $15.7 million to get the stadium completed.

Things went off the tracks early on. The Winston-Salem Journal reports that the original cost figures were little more than a placeholder. Prim needed a number to use when talking to city officials, so he plugged in the cost for Greensboro’s baseball stadium, which was built in 2003-04.

The stadium Prim would build hadn’t actually been designed yet. And when it was designed, it included significant, pricey upgrades, including wider concourses, and a “kid’s zone.” The layout also had to meet city regulations, such as minimizing the impact on the neighborhood from the noise and lighting, and including stormwater controls.

City officials, for their part, were largely uninterested in the accuracy of the cost number and unalarmed when signs started to appear that the ballpark would cost more than originally thought. It was presumed that Prim and Filipowski would cover any cost increases. Indeed, a pricier stadium was seen as a plus, as it would generate more property tax revenues for the city.

By late last year, it became clear that Prim — with or without Filipowski — couldn’t cover the increased costs, or even the original, lower cost amount. City officials felt obligated to provide the money to finish the job.

And in an act of closing the barn door long after the horse had left, Winston-Salem appointed a citizens committee to oversee the stadium project.

In an ideal world, local governments wouldn’t subsidize sports team owners. Those choosing to do so should be fully aware of what they are getting themselves in for.

An early red flag in this case was that the Dash’s owners original request for $12 million to build what was described as a $22.6 million stadium. When private business people, seeking to provide an entertainment facility, don’t want to or can’t come up with even half the funds required, there’s reason to be concerned. Public officials should ask some hard questions, including how solid the cost estimates are. If team owners had a valid business model, they probably wouldn’t need local government’s help. And if they didn’t have a valid business model, as was the case here, watch out.

Sadly, this isn’t the only recent high profile case in North Carolina of local government officials not doing their homework. The Randy Parton Theatre fiasco in Rocky Mount also could have been avoided if officials had done some due diligence.

Michael Lowrey is an associate editor of Carolina Journal.