We Have Questions About the City of Des Moines' Decision to End Stadium Negotiations

We Have Questions About the City of Des Moines' Decision to End Stadium Negotiations

We understood there was new tax reform, and we understood that meant the city needed to take another look at the stadium deal. We expected the City to do that work. What we didn't expect was to never see the numbers behind it.Over the past few weeks, the City gave us new terms and told us, in effect, that its financial position had changed. That raised a lot of questions for us. We wanted to understand the math, the assumptions and the broader financial modeling behind the new terms, but we were never given that analysis.Then, before we had an opportunity to work through those questions together, we learned from a city press release that the negotiations were over.After nearly seven years of working with the City of Des Moines on this project, that's a pretty surprising way to find out. We know the City has real budget challenges, and we don't expect City leaders to ignore changes in state law or make a decision that isn't financially responsible. If the numbers have changed, then of course the deal needs to be looked at again. But looking at it again should mean looking at the numbers. 

What has changed?

The City has said that its financial circumstances changed enough that the terms of the stadium deal no longer made sense. We'd like to understand exactly what financial circumstances have changed that impacted our project. For example, how did the change in state law affect the City's projections for our project? What assumptions have changed for the Capital City Reinvestment District? How much did the City's expected contribution or exposure change? What does the City now expect the project to generate in new revenue? And most importantly, what does the City's current financial model show when all of those things are put together? We haven't seen it. That's important because a citywide budget shortfall doesn't, by itself, tell us whether a particular development project is a good or bad financial decision. The question we should be asking the City is what happens to the City's finances because of the project.

• What would the City spend?
• What would it receive?
• What new property and sales tax revenue would the development generate?
• What private investment would come to the site? What would the City's obligations be over time?
• And after all of that, is the project a net cost or a net benefit to Des Moines?

We are asking to see the City's analysis so everyone can look at the same information. 

What is the financial cost of not doing the project? 

This is another question that we haven't seen addressed. The DICO site doesn't go away if the stadium doesn't happen. The City still owns it, still has obligations associated with it, and still needs to figure out what comes next. Just one year ago in an interview with Iowa Live, ISDF and the Deputy City Manager announced that the City was going to “bring in some fill dirt, plant some grass and it was just going to be an open field” and also recognized “it is a EPA Superfund Site and has a lot of development challenges economically” and then went on to say that when ISDF proposed a soccer stadium the City jumped all over the idea because “with the City, we really wanted to see something that would bring economic growth to that area”.If the stadium isn't the right development, that's a decision the City can make. But what does the alternative cost? How long might the site remain undeveloped? What would another development generate for the City? How does that compare financially with moving forward?Those seem like pretty basic questions when a project of this size is being ended.

We also keep coming back to one other question: why did the negotiations end before we could have a conversation about the City's analysis? When we received the new terms, we had questions. That's normal in a negotiation, particularly one involving a project this complicated. We expected to see an analysis of what had changed from their end and see whether there was a way to address the City's concerns. Maybe there wasn't. Maybe the changes in state law and the City's budget situation had made the project impossible to structure responsibly. We were willing to have that conversation. We just never got the chance. So, these are the questions we're left with, and we think they're questions the public, and the media should be asking, too:

• What did the City's analysis show before, and what does it show now?
• What were the new terms based on?
• What is the project's net fiscal impact to Des Moines?
• What does it cost the City to leave the DICO site undeveloped?
• What alternatives did the City consider?
• Could the deal have been restructured to address the City's new financial concerns?

And if this decision was based on financial modeling, why hasn't that analysis been shared with the public or with the development partner that spent nearly seven years working on the project? We don't think people have to agree that the stadium should be built. But when a major public-private project is declared financially unworkable after years of negotiation, people should be able to see the financial reasoning behind that decision. We'd like to see the City's work. We'd like to understand it. And if the numbers show that the City is right, we'll have to reckon with that. As every math teacher we've ever had told us, show your work. After seven years, we think that's a pretty reasonable thing to ask.