Here’s a report from McHenry County, Illinois, on plans to apply for Federal Stimulus funding to support construction of a minor league ballpark. The county has received authority to issue $27.5m in bonds to fund “private” projects. Equity One Sports Development is applying for $15 million of the bonds, with the owner declaring that, indeed “this is a totally private project.” (He would appear to be addressing the issue of whether direct public subsidy is involved, apart from the financing). Here are the essential details of the financing subsidy:
McHenry County received the bonding authority under the $789 billion American Reinvestment and Recovery Act. The bonds are supposed to encourage lending by giving investors a 45 percent refund of the federal taxes payable on them. Because the bonds are federally backed, the county is not liable if the borrower defaults.
The project qualifies as “shovel-ready,” in the sense that the owner is ready to begin construction in March 2010, because it was part of a proposal for a “Health, Wellness and Athletics” complex at the local community college a few years back. That proposal was rejected, probably because local taxpayers would have been on the hook if revenues were not sufficient to pay off the bonds. If I’m not mistaken, then thanks to the American Reinvestment and Recovery Act, a project which was not deemed worth the risk by the locals who would benefit, may yet be built simply because the default risk has been shifted from local taxpayers to yours truly, a non-local, Federal taxpayer. Sports stimulus, humbug!! As Ray Keating might say, it’s more like sports pork.