Passage of SB 5 established the framework for the use of construction bonds to cover up to $150 million of the construction cost of an Oregon major league baseball ballpark and authorized the use of incremental baseball income tax revenues from home and visiting player salaries, and from the salaries of top team management, but protects the Oregon taxpayer with a series of legal safeguards. No general revenues are used nor is Oregon’s bond rating jeopardized by this type of financing.
An Overview of the Bill
SB 5 provides that the State may enter into grant agreements for 30 years to allow the new, incremental baseball tax revenues — that will come to the State if an MLB team relocates here — to be used to support bonds to assist with the cost of constructing a Major League Baseball Park. All of the baseball business risk is placed on the grantee and team owner. If the State income tax is reduced, the calculations of incremental baseball tax revenues will continue to be based on the current income tax.
The legislation will only become active when these thresholds have been achieved:
- A Major League Baseball team is committed to relocate to Oregon;
- The team is legally bound to remain in Oregon for the length of the grant;
- All of the remaining financing for the Stadium has been committed;
- The grant agreement is requested by the city of Portland, and negotiated and approved by the State; and
- SAFEGUARDS are included to insure that the State and her taxpayers are PROTECTED.
Required safeguards in the legislation and grant agreement
- All State funding is subject to appropriation by the legislature;
- The State has no legal obligation to appropriate funds and the measure does not create any debt for the State;
- The State’s credit rating is fully protected;
- SB 5 provides that the State intends to appropriate only new incremental baseball tax revenues.
- The grantee, the team owner and the bondholders, NOT THE STATE, take the baseball risk if the player payroll taxes fall below projected levels to pay any bonds, and the grantee and the owner, NOT THE STATE, make up any shortfall;
- The granted funds may only be used to pay costs for a major league stadium;
- The methodology for the estimated and actual incremental baseball tax revenues must be approved by the State;
- The grantee must pay the State the difference if any appropriation exceeds the actual incremental baseball tax revenues;
- SB 5 requires all major league baseball teams that play in Oregon to calculate, report and withhold these taxes and pay them to the State on an annual basis; and
- Not a single dollar will be taken away from education, health or any other general fund program, and no tax dollars from current Oregon taxpayers will be used.