When former City Manager Joyce Wilson sought public support for a downtown baseball stadium in 2012 and, later in 2013, one of the central financial arguments was straightforward – the stadium would be paid for with hotel taxes and revenues generated by the facility and its tenant, not by the city’s taxpayers.
More than a decade later, the financial record tells a more complicated story.
Southwest University Park has produced hotel-tax revenue, rent, parking revenue, ticket surcharges and sales-tax revenue. It has become an established downtown venue, hosting baseball, soccer and other events. But the project’s actual finances diverged from some of the most important assumptions presented when voters were asked to support the ballpark.
Most significantly, the original financial model presented by city officials was that none of the cost would be borne by the city’s taxpayers. The presentation projected that the hotel occupancy taxes and ballpark-related revenues would cover the bonds and estimated a $27.8 million surplus from ballpark-related and HOT revenues over the lease term.
The City subsequently used General Fund money to cover ballpark debt, and those subsidies continued for years.
Today, the City still owes $57.5 million in outstanding special-revenue bonds associated with the ballpark, according to its FY2025 audited financial report. The debt balance does not include ongoing rent payments the City uses for housing city departments after it demolished its city hall to make room for the ballpark.
An important revenue figure that is not known is whether MountainStar Sports Group has made the rent payments it is obligated to under the lease agreement. Without considering contractual rent increases, parking fees and other surcharges, at the very least the team owners should have made $5.2 million in rent payments. Forecasting rent increases and other revenue streams, the city should have received around $12 million so far from the ballpark.
Although what is known today does not show the stadium as a financial failure, it also does not support the fact that the taxpayers have benefited as promised.
What The Taxpayers Were Promised
The June 2013 City fact sheet promised that MountainStar would provide an additional $12.1 million toward the stadium through increased rent and other revenues. The financing plan authorized borrowing of up to $60.8 million. Of that amount, the City said $48.7 million would be repaid through the voter-approved hotel occupancy taxes and $12.1 million through MountainStar’s additional funding commitment.
Most important was that the document promised that “$0” would be repaid by El Paso property taxpayers.
City officials and team owners also promised that the city’s taxpayers would see $27.8 million in excess revenues through the end of the lease term for the project. The expected revenues were to be $20.8 million in general revenues, $7.0 million in hotel tax revenues for a total of $27.8 million for the taxpayers.
The presentation specifically noted that the general-revenue calculation included approximately $6.25 million in sales taxes generated by the ballpark that were not needed to fund the new debt.
City staff’s presentation went even further. It said the cost of the ballpark would be paid by hotel occupancy taxes, MountainStar lease payments and ballpark-related revenues such as ticket surcharges and parking. Officials promised that none of the cost would be borne by the city’s taxpayers through the city’s budget.
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The First Years Did Not Deliver on the Promise
Instead of what was promised to the taxpayers, the actual results show a different picture.
Three years after promises were made, by 2016, the City was reporting a shortfall in the ballpark’s finances.
The City made $4.3 million in payments towards the stadium in 2015. The Chihuahua’s owners paid only $1.16 million from its revenues to the city, and the hotel taxes only contributed approximately $2.9 million that year. Even after the revenues and hotel taxes, the city’s taxpayers were forced to cover the $257,000 shortfall.
By 2018, the taxpayer contribution had become even more substantial.
El Paso’s taxpayers were forced to pay $2.2 million from the General Fund money during the first four seasons of the Chihuahuas baseball team to help pay for the ballpark’s debt. The City also reported it was preparing to spend approximately $1.2 million on capital improvements to the publicly owned facility, something that was not included in the promises to the taxpayers.
City Admits Subsidies Would Continue Through 2021
By 2018, the City was projecting that the taxpayers would support the ballpark through 2021. MountainStar’s officials said that the original economic model had anticipated an initial five- or six-year period during which the ballpark would operate at a deficit. This was not part of the promises made in 2013.
The following year, city officials announced that the hotel occupancy taxes and team revenues were expected to be sufficient to cover ballpark debt beginning in fiscal year 2020.
But the 2020 pandemic disrupted the new promises made to the taxpayers.
COVID-19 Exposed Dependence on Hotel Taxes and Event Revenues
The ballpark’s financing model depends heavily on revenue streams tied to tourism, hotel occupancy and attendance. When COVID-19 sharply reduced hotel occupancy and eliminated the 2020 minor-league baseball season, the financial model was disrupted.
In January 2021, city officials reported that the taxpayers had incurred another $570,381 in ballpark debt costs for that year because of the reduction in hotel occupancy tax revenue and the absence of fans. By then, El Paso taxpayers had contributed over $3 million to the ballpark since it opened in 2014, according to city figures.
Supporters of the ballpark will point to the pandemic as an extraordinary event that very few could anticipate in defending the promises made for the ballpark. But that argument falls short once the taxpayers note that the ballpark had already required taxpayer intervention by the time the pandemic arrived.
Refinancing Improved the Finances, But Did Not Eliminate the Debt
El Paso taxpayers received some good news in March 2020, when city officials announced that refinancing the ballpark debt produced around $11 million in savings.
But absent in the savings announcement is the backstory to the financial interest savings is that the pandemic was the catalyst for massive debt financing activity because of historic Federal Reserve easing of government lending and a corporate “dash-for-cash” liquidity that led to ultra-low interest rates to help bolster the economy. Without the pandemic it is unlikely that city officials would have realized the $11 million in interest savings by refinancing the ballpark debt.
Nonetheless, the City did not reduce its debt for the ballpark. As of last year, El Paso’s taxpayers still carry a balance of around $57.5 million for the ballpark, not including recurring interest on the debt obligations. The ballpark has four revenue bonds outstanding that do not mature until 2043.
The Hotel Tax Does Much of the Heavy Lifting
The original financing concept depended heavily on the additional hotel occupancy tax approved by voters in 2012. The City’s current FY2026 budget confirms that the additional 2% hotel tax, which took effect in January 2013, still pays for the ballpark debt. City officials say that more than six million people have attended games or other events at the facility since it opened in 2014. The City forecasted that it would collect almost $12 million from the hotel taxes in FY2026, up from $8.82 million in FY2022. Not all the tax monies go towards the ballpark.
But city officials are having a difficult time collecting the tax from the hotel operators.
On Tuesday, the city council will receive a report showing that $2.2 million is owed by several hotel operators.
The delinquencies demonstrate that the funding mechanism of the hotel taxes for the ballpark are only useful so long as the city successfully collects the taxes it is owed. If insufficient tax monies are collected to meet debt obligations, it is the taxpayers that would foot the debt payment.
Did the Taxpayers Get What They Were Promised?
There are two (three if you include a promised surplus) different answers depending on which promise one looks at.
Promise No. 1: The ballpark would not require taxpayer support.
The historical record clearly does not support this promise made to the taxpayers.
The 2013 City presentation said that none of the cost would be borne by the taxpayers. Yet the City subsequently used General Fund money to cover ballpark debt. Approximately $3 million of taxpayer funds have been used to pay the debt.
Promise No. 2: Dedicated revenues would ultimately cover the ballpark’s obligations.
On the surface it appears that this promise was somewhat fulfilled but it is a complicated picture,
Hotel taxes, rent, parking, ticket surcharges and other revenues have provided significant resources toward the ballpark. But refinancing because of the pandemic also reduced the City’s projected costs in interest savings.
The refinancing helped to reduce interest payments, but city officials cannot hope to use refinancing again before the debt is settled in 2043.
Promise No. 3: The project would produce a surplus for the taxpayers.
Officials promised that the taxpayers would see a projected $27.8 million from the ballpark. But the figure isn’t expected until after the 30-year lease for the ballpark expires.
The Bottom Line
Are El Paso taxpayers benefiting from the ballpark? It’s complicated. On one hand, even after the 30-year lease ends, the city will still have to maintain the stadium. It is also a public stadium that does not generate property tax revenues to the city. It’s not accurate to say that the ballpark has simply been a drain on taxpayers, but its also not accurate to say that the stadium performed exactly as promised and never required taxpayer support.
The City initially told taxpayers that the stadium could be financed without taxpayer interventions, using hotel taxes and stadium-related revenues, and projected a $27.8 million surplus over the lease term.
The actual record shows that the city subsequently used taxpayer money to support the stadium, spent additional public money on capital improvements, refinanced the debt, and endured a particularly severe revenue shock during the pandemic.
At the same time, the ballpark has generated dedicated revenues, remains an active public venue, and has continued to receive hotel-tax support under the financing structure established in 2012.
But El Paso taxpayers still carry a debt of $57.5 million in outstanding stadium-related debt.
El Paso taxpayers were promised that they would not have to fund the stadium. They did. Will the promised $27.8 million surplus be realized is as of yet unknown for at least another 18, or so years.
Cover photograph: The Southwest University Park, file photograph.