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A Stadium In the Balance? City may have little choice, since foreclosure would also be costly
The view of downtown from the unfinished baseball stadium, suite level, first base side. Work at the site has been stalled for months.
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Published: June 14, 2009
One of the people closely involved as the city prepares for a public hearing Monday on the latest proposal to save the downtown ballpark sitting half-finished off Business 40 is City Attorney Angela Carmon.
She is the person who will draft the contract between the city and Brookstown Development Partners LLC -- the company set up by Winston-Salem Dash owner Billy Prim.
And though she won't be the person who decides whether or not the city moves forward with the deal, she has seen a lot of numbers in the past few weeks.
Stadium construction has been stalled for months because of a dispute between Prim and his partner and former brother-in-law, Andrew "Flip" Filipowski, who is now out of the picture. The original bank that loaned money for the project wants out because off the Prim-Filipowski dispute, and Prim has been unable to get a new loan. That led him to the city, which he is asking to stand in.
Friday, Carmon said that there are only some numbers that concern her now. If the stadium fails, something Prim has promised if the city doesn't come through with what, in essence, is a $15.7 million bailout, the city stands to lose.
"The city already has $12 million invested into the project, and that would basically go away -- we wouldn't be able to recoup that (if the stadium were to go into foreclosure)," Carmon said.
Rising estimated costs
According to documents sent last week to the city council, the stadium is now expected to cost $40.7 million to build, a total almost 80 percent more than the $22.6 million cost when the stadium broke ground in October 2007.
The latest price also is up $2.7 million, or about 7 percent, since December, when Prim first announced plans to upgrade the park replacing the old Ernie Shore Field as home of the Single A team, an affiliate of the Chicago White Sox.
Under the latest figures revealed last week, land for the stadium is going to cost an additional $8 million, and land for the surrounding development, which is supposed to include shops, restaurants and office space, would cost an additional $10 million, bringing the total cost for both pieces of the development project to $58.7 million.
Prim has invested $2 million of his own money in the project, according to documents released by Prim. Other private investors have contributed $3.7 million and banks have lent $25 million. The Millennium Fund, which was created by the Winston-Salem Alliance in 2003 to finance economic development in the city, is contributing $1.3 million.
The alliance is a nonprofit organization led by Mayor Allen Joines, who has been the stadium's biggest public supporter and helped persuade city council members of the merits of the project back in 2007.
Private investment, counting cash investments from Prim and others, bank loans, and the Millennium Fund money, totals about $32 million.
The city's investment, if the council approves the new deal, would come to about $27.7 million. The city is expecting to be reimbursed for its cost in full over the course of 25 years, at which time it would take ownership of the stadium.
As much as $27.7 million sounds like a lot of money, Carmon said that the city would spend more if a bank foreclosed on Prim's development company.
Under that scenario, the city would probably finish the stadium anyway, she said, meaning it would have to pay off a bank's lien on the property, which could cost as much as $18 million. The city also would have to pay back contractors who have not been paid for work already done on the stadium -- at least $10 million, she said. And the city would still have to pay the construction costs of finishing the ballpark.
Carmon said that if the city council approves the deal being proposed by Prim, none of the money will go to pay off Filipowski. The city's money, she said, would be used to buy the land on which the stadium is being built. The city would get a title to that land in exchange for taking out the loan, which Prim would pay back over 25 years.
Robert Clark, the only Republican on the city council, said he needs specific answers before deciding whether he will support the deal.
"If for some reason the stadium revenue does not generate enough income, is there something else that we can look to?" asked Clark, who represents the West Ward. "I don't know whether there is or not. We are in second position to the banks, and that is not a good position to be in."
Time to prepare for hearing
Almost as soon as the proposal was announced, the backlash started.
Some political activists said that the weekend was not enough time for taxpayers to analyze the deal and be prepared for Monday's public meeting.
"People who have left town for the weekend -- they won't even know about this until Monday," said Joyce Krawiec, the state grass-roots coordinator for Freedom Works, an organization that lobbies against taxes and big government. "This is like flying under the radar, hoping they can get it done before people know what's happened."
Joines said that the city scheduled the meeting quickly in an attempt to get construction moving again. He said that even if the council approves the deal on Monday, legal contracts need to be drawn up and signed and bank loans need to come through.
Prim said last week that if the stadium fails, he will not be at risk of personal bankruptcy, but Joines said that Prim was still taking a chance. "He's got $30 million at risk here," Joines said. "He's got lots of skin in the game."
Deciding whether to support the deal could become a point of debate in this fall's city elections.
Joines, a Democrat, is running for a third term as the city's mayor. The entire city council is also up for re-election.
Only one member -- Nelson Malloy, a Democrat who represents the North Ward -- has said he will not run again.
Forsyth County Commissioner Debra Conrad, a Republican who in the past has supported incentive deals, said she is happy that the county limited its involvement in the stadium project to the second phase, the commercial development.
She said that if she were sitting on the city council, "it would be very difficult to say yes" to the latest deal.
On the other hand, Conrad said, an unfinished ballpark would be "a symbol of failure" for the city.
Council member Wanda Merschel, who represents the Northwest Ward -- where the stadium is being built -- said that giving Prim's development company more money might not be popular. But an unfinished ballpark, she said, would be a blemish.
"There is no easy solution that will just send out bells ringing within the community that this is a good thing," Merschel said. "There's just no easy fix to this."
■ Laura Graff can be reached at 727-7279 or at lgraff@wsjournal.com.
■ Wesley Young can be reached at 727-7369 or at wyoung@wsjournal.com.
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