Total Direct Cost: $90M to $145M
Claim:
- stadium will be privately funded.
Fact:
- stadium will require land purchases and infrastructure improvements costing San Jose at least $90M initially, plus a loss of roughly $1M a year from foregone property taxes.
- This is a net ROI (Return on Investment) of 2% or less.
The Economic Impact Analysis says nothing about what a baseball stadium will cost San Jose. Supporters talk about the stadium as privately financed, implying no cost to San Jose. This is a critical, and not accidental, omission. No honest financial statement reports only gross income, ignoring the upfront costs and the ongoing expenses. But that is exactly what the Economic Analysis does.
The truth is the baseball stadium is not free for San Jose, and it is a very poor investment.
There are significant upfront costs - some of them hidden, some of them unknown - and significant ongoing costs and losses of revenue (equivalent to long term subsidies to the stadium). These costs include:
Land cost: $60M to $100M (present value)
San Jose almost certainly will effectively give away the land for the stadium - the baseball owners won’t pay for it. San Jose will have directly spent about $50 million to acquire this land over a period of years. Based on recent prices of $4 - $8 million dollars per acre for much smaller parcels nearby, the current value of the stadium site is $60 - $100 million. This site is the only developable parcel next to the planned large transportation hub at Diridon station. Only the city could assemble this large a parcel in such a critical and valuable location, and its value can be expected to significantly increase in the future.
Cost to demolish/relocate existing buildings: $10M - $15M
About 15 structures on the proposed site need to be demolished or relocated, and the land cleaned up. The RDA budget indicates that this will cost about $15 million.
Infrastructure costs: $20M - $30M
The stadium will necessitate a number of major infrastructure changes. Many are described in the Environmental Impact Report for the stadium project, including:
- extension of Autumn St. to Coleman Ave.;
- abandonment of Montgomery, and changes to S. Autumn St.;
- changes and improvements to Bird Ave., between I-280 and Park Ave.;
- changes and improvements to Delmas Ave.;
- changes and improvements to Julian St., including the SR87 ramps;
- changes to Park Ave., including narrowing it to 2 lanes;
- improvements to the 7th Ave. and I-280 ramps.
Costs are presently unknown, except for an estimate of $11M for just the first phase of the Autumn St. extension. A current rough estimate of the total cost is $20M to $30M. It is true that any development at the Diridon site will require some of these infrastructure improvements, but that makes it even more important that the city get the most revenue it can from that development. A baseball stadium does not do that.
Loss of property tax from land value: $1M per year (average for 30+ years)
Most stadium deals end up with the team owners paying little or no tax on the land value. San Jose is not likely to be an exception.
Worse, many costs will be hidden/unknown until the final lease agreement between the city and the team owners is negotiated behind closed doors, and this will probably come too late for any meaningful public scrutiny. Cities are in a very poor negotiating position with team owners once the momentum for a stadium is established. The team owners have all the leverage and they’re the only side negotiating with their own money. The lack of transparency about costs now by the city does not bode well for the future.
