Tuesday is shaping up as a pivotal day for soccer in the South Sound, as the Tacoma City Council is set to discuss — and potentially vote on — legislation which could pave the way to development of a 5,000-seat soccer-specific stadium which could be home to professional soccer for years to come.
There are still several moving parts to the deal, but if the City Council passes the legislation (Resolution 40567), it would authorize the execution of a letter of intent (LOI) between the City of Tacoma (COT), Metro Parks Tacoma (MPT) and The Soccer Club of Tacoma (TSCOT). The Sounders’ interest is represented by TSCOT. The LOI would assist the parties in “establishing terms for the negotiation of future agreements regarding a potential soccer stadium, and future adjacent development in the vicinity of Cheney Stadium,” according to the agenda Item released by the city ahead of the meeting.
The Letter of Intent outlines the major components of a potential deal between the parties, including the scope of the project (stadium and surrounding development), funding (including public contributions), lease details and timeline for delivery of the stadium.
It should be noted that the LOI is not a binding agreement to build a stadium, but it does serve as a blueprint for how a deal would be put together. Thus if the parties are able to come to an agreement in the future, it would likely mirror the terms outlined in the LOI.
According to the LOI, “The Stadium includes a program that will support the operating of one first division professional women’s soccer franchise (currently Reign FC), and one USL-Championship professional soccer franchise (currently the Tacoma Defiance), and additional professional sports franchises; to wit, a 5,000 fixed-seat facility which meets US Soccer professional soccer stadium standards.” It’s unclear from the LOI whether the stadium is expandable, should demand warrant it, but various statements from club officials have suggested it is.
The LOI sets the cost of the stadium at approximately $60 million. All of the funding resources have not yet been identified, but the LOI does provide the following breakdown:
- City Contribution: The City of Tacoma contribute a maximum of $15 million through an upfront payment of $10 million, followed by two annual payments of $2.5 million. A proposed amendment indicates that the second $5 million will be an “in-kind” investment, dedicated to “offsite improvements and other mitigation required as part of the Stadium capital project.”
- TSCOT contribution: TSCOT has agreed to pay $2.5 million up front, and fund $16 million “through guaranteed and secured annual debt service payments (estimated at $900,000 per year, at 3.5% interest for 30 years), over the term of any bonds issued to fund Stadium construction costs,” according to the LOI. These payments are not dependent upon stadium revenues.
- New Markets Tax Credits: TSCOT, MPT and COT will jointly support Congressional reauthorization of the New Markets Tax Credits (“NMTC”). The LOI estimates that the NMTC would provide about 20% of the funding ($12 million). If these funds are not available, the parties would work to identify alternate funds.
- Other public funding: The LOI identifies $7 million in other public funding sources for the project, “in the form of a credit of the State’s share of local taxes to fund Stadium construction costs, consistent with the State’s historical role in funding the construction of major league sports venues in Seattle.” If these funds are not available in part or in whole, TSCOT proposes to contribute up to $2 million to cover the shortfall.
Once all of the funding sources are identified, the LOI proposes that the City of Tacoma issue bonds that, combined with the available cash, would cover the cost of the project. According to the LOI, TSCOT would cover any cost overruns and the City and Metro Parks obligations are capped.
The LOI calls for a 30-year lease, where TSCOT will be the master tenant and operator of the stadium. It further requires that TSCOT secure a 1st division women’s profession team (OL Reign) and a second division men’s profession team (Tacoma Defiance) as tenants. TSCOT retains revenues from operation of the stadium and is required to pay rent and cover maintenance.
The parties are still working to resolve several issues regarding the exact location of the stadium site, and the development generally. According to the LOI, “The Stadium is intended to be constructed on the easterly portion of relevant parcel J-1 and the ‘Supporters Green’ is intended to be constructed on the westerly portion of parcel J-1, which is owned by MPT.” The LOI calls for the City to become the owner or tenant of that site. The parties also working to resolve the ownership of another parcel of land which is currently owned by MTP.
To garner public support for the stadium, the Seattle Sounders, in conjunction with the Tacoma Defiance, have scheduled a series of events over the next week. Prior to the city council meeting, the Defiance will hold an open training session and Media Day at Cheney Stadium from 1:00-3:00 p.m.
Beginning at 4:00 p.m., TSCOT will hold a community rally at An American Tavern with Brad Evans and Lamar Neagle scheduled to attend. The rally is open to the public. Prior to the Metro Parks meeting on March 9, another rally is planned, with details to be announced at a later date.