Joseph Krist
Publisher
STADIUMS COMING BACK TO THE TROUGH
Tampa, Charlotte, Washington, D.C., Phoenix, K.C., Milwaukee, Cleveland, Pittsburgh
Phoenix – The Arizona Diamondbacks aren’t really asking but they have made it clear that they want renovations to Chase Field and that they would be happy if they received public funding assistance. The team would be willing to pay more than 75% of the Chase Field upgrade costs, it says. The total estimated cost – $500 million. The Diamondbacks’ lease with the stadium expires in 2027.
One wrinkle is the fact that a previously approved tax district could be activated by then team which would implement a 1% to 9% tax on anything sold at Chase Field. They would rather not do that.
Jacksonville – “If Jacksonville loses an NFL team, they’re never going to get another one. Do you want to keep the NFL in Jacksonville?” – Jacksonville Jaguars president Mark Lamping. The Jags’ lease at EverBank Stadium is scheduled to expire in 2030. The team has proposed a $2 billion renovation or replacement. They would like to have public funding cover 50% of that.
Tampa – The Devil Rays of MLB Rays and the city of St. Petersburg announced plans for a $1.2 billion, 30,000-seat stadium. Small? Yes. But the Rays are never strongly attended. Since the club’s debut in 1998, the Rays have ranked last or next-to-last in American League attendance 18 times. The plan is for a facility opening in 2028. As is the recent trend, the ballpark is expected to serve as the centerpiece of a larger, 86-acre redevelopment of St. Petersburg’s Gas Plant District. The Rays plan to pay $700 million toward the project, as well as any cost overruns, while the public sector will contribute $600 million.
Milwaukee – Republican legislators announced a bill that would devote more than $614 million in public funding to repair and renovate the Milwaukee Brewers’ stadium. Under the proposal, the state would give the team $60.8 million next fiscal year and up to $20 million each year after that through 2045-46. The city of Milwaukee would contribute a total of $202 million, and Milwaukee County would kick in $135 million by 2050. The team would contribute about $100 million and extend its lease at American Family Field through 2050, keeping Major League Baseball in its smallest market for another 27 years.
According to a Legislative Fiscal Bureau memo attached to the legislation, baseball operations at the stadium currently generate about $19.8 million annually in state and local taxes. That figure is expected to grow to $50.7 million annually by 2050, according to the memo. Milwaukee County and the City of Milwaukee would together pay a total of $7.5 million each year, totaling around $200 million. That would be broken down into $5 million in yearly county payments and $2.5 million city payments.
Baltimore – The State of Maryland and the Orioles announced a 30-year lease extension. The current one runs out in December. The negotiations became public and contentious – ownership is not a favorite of the fans.
Kansas City – The club is deciding between a 27-acre site in downtown Kansas City, in Jackson County, and a larger 90-acre tract in neighboring Clay County. It places the two primary stadium development templates in competition with each other. The push has been for a downtown stadium but the suburban location may offer greater overall development potential.
ELECTRIC VEHICLES AND THE UAW
Underneath of all the discussion of benefits and wages animating the strike by the UAW, the issue of electric vehicles is driving the dispute. Much of the establishment and expansion of the electric vehicle industry is occurring in right to work states in the South. It is what has put Georgia and Tennessee at the center of EV development and production. This movement towards non-union states had been offset in part by the announcement of new or retooled factories, especially in Michigan.
The strike was recently expanded at the other two automakers but Ford was spared an expansion. Now that may change as Ford announced that it was suspending construction of a battery factory in Marshall, Michigan because of concerns that the plant might not be able to make products at a competitive price. The company cited potential increased costs related to a labor settlement. Ford had said it would invest $3.5 billion to build the factory and employ 2,500 people when production begins in 2026.
At the same time, politics have also gotten in the way. The proposed Ford plant would use technology licensed from CATL, a Chinese company that is the world’s largest maker of batteries for electric cars. That has caused partisan criticism of the plant. At the same time, Tesla continues to use similar batteries in its cars. The pressure against the Chinese has led the Administration to consider regulation effectively keeping the batteries made in China out of the U.S. market.
WHERE ARE EVs OWNED?
We recently came across some research by the U.S. Office of Energy Efficiency and Renewable Energy. The office looked at registration data and used it as a proxy for sales of electric vehicles. Based on that data there were four counties in the United States with electric vehicle (EV) market penetration above 30% as of December 2022, and all were in California.
Tech oriented Santa Clara County reports a 35% rate, followed by Marin County at 34%, and then Alameda and San Mateo Counties at 32% each. Several counties outside of California also had robust EV sales, including Boulder County, Colorado (22%) and San Juan County, Washington (22%). As of the end of 2022, there were 100 counties where EV market penetration was 10% or more.
The vehicles are for now a primarily West Coast phenomenon. The wealthier counties around major American cities show the greatest adoption levels but rates in excess of 10% were not the rule.
FIRE AND PUBLIC POWER
Recently we were asked if we believe that there was a heightened risk of bankruptcy for public versus investor-owned utilities. The issue has come in the wake of litigation against PG&E in California after several fires and litigation against Hawaii Electric related to the Maui fire. Our view is that the risk, while not an immediate credit threat is a potential long-term problem. There just has not been an opportunity to test the vulnerability with a public power provider.
That changed this week. Inland Power is Washington State’s largest electric cooperative and currently serves more than 34,000 members across 13 counties in eastern Washington and northern Idaho. Founded in 1937, the co—op was established to serve primarily a farming base after the Rural Electric Administration has brought electricity to those areas. A lawsuit filed in Spokane County Superior Court says Inland Power and Light Company’s electrical equipment contacted or caused sparks to surrounding vegetation that started the Gray fire on Aug. 18.
The suit alleges the utility designed its power lines to be bare, uncovered and carry a high voltage. The suit charges that this increased the risk of fire. Wiring has been a major issue associated with prior litigation resulting from fires. A second lawsuit, filed on behalf of 44 people affected by the fire, says an outdoor light constructed by Inland Power was seen sparking near the origin of the blaze. So far, the dollar amounts do not appear unmanageable. It does shine a light on the fact that litigation risk for utilities – public or IOU – has clearly increased. The ongoing impacts of climate change and the increasing severity of natural disasters will increase the risks of litigation. The Washington Department of Natural Resources has said it could take months to determine what caused the Gray fire.
CARBON CAPTURE
Japanese manufacturer Kawasaki Heavy Industries and their partner, Japan Carbon Frontier Organization, will officially complete construction on their carbon capture testing system at the Wyoming Integrated Test Center (ITC) in Gillette on Oct. 9. The project is a solid sorbent carbon capture system, which uses physical or chemical absorption to capture carbon dioxide. The project aims to show that this technology is viable for commercial deployment to large-scale power plants.
In Wyoming, a 2020 bill that requires coal-fired plants to be retrofitted with carbon capture, utilization and sequestration technology in an attempt to prevent them from retiring early drives efforts to show the viability of the technology. The Wyoming Public Service Commission approved a carbon capture compliance surcharge for Rocky Mountain Power customers in Wyoming.
Summit Carbon Solutions announced plans to resubmit its construction permit to build a carbon pipeline through Soth Dakota. The company has announced the creation of team to convince farmers unwilling to grant easements to Summit. In addition to increased staff as residents of the area, Summit is considering changes to its proposed right of way. Both sides agree that trust between the company and the reluctant (mostly farmers) needs to be rebuilt. Summit went so far as to say it would “turn over a new leaf” which is as close as a company is going to come to saying it screwed up.
MIAMI DADE EXPRESSWAY
The long running battle between Florida state legislators and local operating authorities continues. The effort has been to create a new entity to take over the operation of the Miami-Dade Expressway and somehow be able to lower or eliminate tolls on the facility. MDX, the entity which operates five toll roads in the area was authorized in 1990. It is run by a toll board governed by a majority of members appointed by the County Commission.
The Florida Legislature passed legislation in 2019 dissolving MDX and replacing it with GMX, a board governed by most appointees of Gov. Ron DeSantis. Since then, the matter has been in the Florida courts and that process culminated in a decision against MDX. Last week, Miami-Dade commissioners advanced legislation seeking to dissolve GMX. Counsel for the County contend Miami-Dade retains under its “home rule” authority granted in the Florida Constitution. That provision prevents the Florida Legislature from passing laws only affecting Miami-Dade.
The state’s own moves in the wake of the legislation seems to support the County’s theory. The latest version of the GMX legislation that led to the recent takeover circumvented the home-rule defense by adding a portion of Monroe County to the toll board’s authority. That portion of land happens to be located in the Big Cypress federal preserve, where the only transportation option is a gravel road. The likelihood of continued litigation grows each day.
LITIGATION
For the cash strapped U.S. Virgin Islands government, $75 million is not an insignificant amount of money. That is how much will be paid under a litigation settlement with JP Morgan Chase. JPMorgan Chase will pay $75 million to settle claims brought by the U.S. Virgin Islands relating to the bank’s dealings with deceased financier and sex offender Jeffrey Epstein. The settlement calls for the bank to pay $30 million to support charitable organizations in the U.S. Virgin Islands, $25 million to support law enforcement efforts to combat human trafficking in the territory and $20 million in attorneys’ fees.
The 2nd U.S. Circuit Court of Appeals sided with the state of Connecticut, upholding a lower court decision that said the state’s lawsuit against Exxon Mobil should be heard in state court. This is the seventh court to rule against the oil industry on this matter.
PUBLIC POWER AND EMISSIONS
An industry group recently released the results of a review of utilities and their emissions reduction goals. It focused on those utilities which have made it their goal to reduce carbon dioxide emissions by 80% by 2030. That is a more aggressive goal than is required under the Clean Power Plan Regulations developed during the Obama administration. A list of 25 utilities with such stated goals.
On that list are a total of 13 public power entities. They range from joint action agencies (JOA) to individual municipal distribution utilities and are located all across the country. JOA utilities include Southern Minnesota Municipal Power and Platte River Power Authority. The co-op on the list is in Vermont. Local utilities include those serving Austin, TX, Colorado Springs, Fort Collins, CO, Eugene, OR, Snohomish PUD, and Concord, MA. California utilities include LADWP, Pasadena, and Sacramento.
ANOTHER KIND OF CONGESTION FEE
The congestion fee plans moving towards implementation in NYC have generated much debate. Part of the process is assigning blame which focuses on things like double parking and delivery vehicles. While that debate unfolds, other jurisdictions have been testing other strategies impacting the delivery vehicle cohort.
Pittsburgh has been experimenting with the idea of ‘smart loading zones”. The concept designates certain portions of on-street curb space which are painted purple. These zones charge for parking by the minute – it used a graduated payment system, which started at seven cents per minute for the first five minutes and went up to 27 cents per minute for cars that parked between 30 and 60 minutes. The idea was to make it very uneconomical for non-commercial parking.
The initial zones were located within the central business district. It was expanded to two other zones with declining rates. The fees were not universally supported especially by local merchants. This week, legislation was introduced in City Council that would revamp the fee structure. If the legislation is approved, the smart loading zones would have a 15-minute free grace period before vehicles are charged.
Vehicles that park from 16 to 30 minutes will be charged the hourly metered rate, which is $4 in Downtown, $3 in Oakland and the Strip District and $2 in Squirrel Hill and Lawrenceville. Cars parked from 31 minutes to an hour will be charged double the hourly metered rate, and vehicles parked for up to two hours would be charged three times the metered rate.
The city agency overseeing the project the Department of Mobility and Infrastructure (DOMI) cites data showing that about 55% of people who park in the smart loading zone park for less than 15 minutes. Less than 5% of smart loading zone users stay there for between one and two hours.
In a manifestation of the nudge theory, enforcement would change. Initially, the smart loading zones were enforced Monday through Saturday from 5 a.m. till 10 p.m. At the start of this year, DOMI adjusted the hours to 8 a.m. till 10 p.m. to incentivize loading at early morning off-peak times. The changes are estimated to be revenue neutral to negative. It is not designed as a revenue maximiser as so many critics of New York’s plan point to.
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