Erie County expects to pay $103 million during the course of a proposed 10-year lease deal with the Buffalo Bills on Ralph Wilson Stadium for renovation work and subsidies to the team.
That annual cost has been built into the county’s 2013 budget and its spending projections for the next four years, but County Executive Mark C. Poloncarz hasn’t ruled out whether he will need to ask for a tax increase during the next few years.
“I’ve heard some criticism out there saying, ‘Oh, this means taxes are going to be going up as a direct result of the Buffalo Bills lease,’ ” Poloncarz told Erie County legislators Tuesday. “Our four-year plan as projected right now already includes the costs associated with the Buffalo Bills lease. We don’t anticipate having to go above and beyond that.”
That four-year plan, however, anticipated county property taxes going up in 2013 – and continuing to bring in more revenue in future years to cover rising county expenses.
Now, after that tax increase was turned down late last year, Poloncarz said he doesn’t yet know whether he will ask lawmakers again to raise taxes.
“I really can’t answer what the final result is going to be,” Poloncarz said of work to revise the four-year plan. “Everything’s on the table. We do know if the budget had been approved as presented, we were not anticipating having to do another tax increase in the out years. We would have had sufficient revenue. I don’t know now.”
The cost of a new lease – and how the county will pay for it – was on the minds of county legislators Tuesday as they had their first chance to publicly question Poloncarz and Bills executives about the deal they struck in late December.
Poloncarz has asked legislators to approve a memorandum of understanding and a nonrelocation agreement with the Bills and the state at the Legislature’s next meeting Jan. 24 so that the documents can go to the National Football League for approval when team owners meet in March.
That would clear the way for a $130 million stadium modernization project to begin later this year, with construction work on the county-owned stadium slated to wrap up in 2015. The focus of the work, Bills CEO Russ Brandon said, is on the “fan experience.”
“If you walk into that building today, there are some areas in the common fan areas that, quite frankly, are not much different than in 1973,” Brandon said. “So we’re looking to upgrade those areas.”
The cost of the stadium upgrades will be split among the county, the state and the Bills, with the county paying $40.7 million, New York State funding $53.9 million of the construction work and the Bills picking up $35.5 million.
The proposed lease also would extend payments already made to the team and for annual stadium improvements.
Under the new deal, the county and the state will split the cost of annual subsidies the team receives, as well as reimbursing the team for game day and stadium operating expenses.
Those costs are expected to start at $7.7 million in the first year of the lease and increase to $10.1 million when it expires in 2022, according to the county’s calculations.
Annual stadium upgrades expected to cost between $4.6 million to $6 million a year also will be footed largely by the county and the state, with the team contributing between $800,000 and $977,000 a year through rent payments. A portion of that money can be diverted into studying the potential for a new stadium starting in 2018.
The public contribution, county officials say, will be recouped in sales tax revenue, state income tax and the less tangible benefits of having an NFL team in the region – all a focus of county legislators as they met with Poloncarz and Bills representatives Tuesday to discuss the terms of the lease.
“I’m pretty sure you can justify this investment on the part of the county, but I’d like to hear it so that when my constituents ask me, I can say, ‘Yes, I know that’s a lot of money, but here’s where we’re getting back that,’ ” Legislator Kevin Hardwick, R-City of Tonawanda, told Poloncarz.
The county’s analysis focused on state income tax that Bills players and staff pay each year because it was the clearest example of a revenue source that would disappear if the team and its employees moved out of state. Deputy County Executive Richard Tobe said the county’s calculations show the team would generate roughly $140 million in income tax payments to the state during the 10-year deal.
That doesn’t include sales tax generated by team ticket sales or by other businesses that see increased sales because of Bills games. Those numbers, Tobe said, are more difficult to calculate because it is difficult to determine how much of that money would be spent at other businesses if the team was not here.
But Poloncarz noted that the recent National Hockey League lockout likely cost the county more than $1 million in lost sales tax because of bars, restaurants, hotels and other entities that lost business when games weren’t played.
“While the Sabres and the players and the organization will generate revenue now that they’re back, for the bar owners and the county, that’s lost revenue going forward,” Poloncarz said. “So those are things you have to think about when we negotiated this.”
The lease’s total $103 million cost to Erie County does not include interest it will pay on debt for the renovation work – numbers that will not be finalized until after the county decides how it will borrow money for the construction work. The last lease, a 15-year deal that will expire in July, cost the county about $93 million in direct expenses.
The state’s share of expenses under the new lease during the next 10 years would be $123.5 million, according to the county.
County legislators also heard a proposal Tuesday from a group of businessmen headed by Nicholas J. Stracick that hopes to construct a new multi-use stadium on the outer harbor in Buffalo that would include a “North American Museum of Sports and Culture” operated by the Strong Museum of Rochester. The group, which has formed a limited liability corporation called Greater Buffalo Sports & Entertainment Complex, is seeking an option on the waterfront land so it can get financing and other revenue sources for a proposal to construct a new stadium that would cost $1.4 billion.
George F. Hasiotis, vice president of the group, told lawmakers that planning for a new stadium needs to move forward well before a “new stadium working group” created under the proposed new lease would begin its work.
“It has to be done now, because it takes so long,” Hasiotis said. “It can’t be deflected off to a committee.”