Rays show us the money. We’ll put up ours after you put up yours. And after Mayor Welch cleans up the mess.

Pinellas County is scheduled to vote on Tuesday as to whether to approve the sale of bonds to pay its $312.5 million share of a new stadium.    

But the County does not have to show their money now.  In fact it shouldn’t.  The Ray’s are supposed to show the county, the city and all of us their share of the money, and some other things first.   But more important, the Rays have written some letters saying they can’t afford to live up to their end of the agreement.   

Before Pinellas County puts up its money, St. Petersburg Mayor Ken Welch needs to clean up the mess – what is the stadium going to cost and who is going to cover those costs – and the Rays need to show us the money.

The deal that Mayor Welch made with the Rays said that the Rays will pay any  cost overruns.  On a $1.3 billion building you know higher costs are sure to happen.  Especially now that we know hurricanes come here, and with hurricanes come delays and rebuilding costs.  But now the Rays say that part of the deal is gone.  They cannot afford to pay for cost overruns.

The Rays have said they need clarity – is the County going to approve the bonds.  But the County needs clarity first from the Rays.  Before the County does anything, have Mayor Welch clean things up – what is the stadium now going to cost and who is going to pay those costs?  I have some suggestions below for Major Welch, including taking the Rays to court. 

In addition, before the County  votes to approve bonds, the Rays are supposed to provide:

1. Proof that MLB – Major League Baseball – has lent $100 million.
2. Proof that the Rays have spent $10 million.
3. Proof that the architects are half done with the plans.
4. The budget and plan to pay for all the costs of the stadium.  (Really important since the city and county  might now be on the hook for cost overruns.) 

Would you put up your money before your partner shows up with theirs?  Even if the deal with your partner said they had to show theirs first?  Would you even do the deal at all when your partner says if costs go up it’s now on you, when that wasn’t the deal. 

I have written to the Pinellas County Commission, urging them to suspend voting to approve the sale of bonds for a new stadium until the Rays do what they are supposed to do first and Mayor Welch clears the issue of who is guaranteeing cost overruns.   

The Commissioners will be voting on Tuesday.  

To my friends in the press – why don’t you ask these commissioners some hard questions before the Tuesday meeting.  You have plenty of information to work with below.  And if you want to talk, email me at homerunsmatter@gmail.com

To my subscribers – If you have a strong opinion on what the commissioners should do, write to the  Pinellas County Board of Commissioners over the weekend and express your thoughts.  The Commissioners like to hear from their constituents.  (You might also let the St. Petersburg City Council know what you think about their actions.)

HERE is how to write to them. 

[Letter Sent Dec. 13 to the Commission, in whole and unedited.]

Subject: Urgent: It would be irresponsible to approve the sale of bonds for a new stadium now.   

Pinellas County Commissioners: 

I am writing to express my concern regarding the recent developments in the agreement with the Tampa Bay Rays for the construction of a new baseball stadium. As you know, a key term of the agreement was that the Rays would cover any cost overruns. However, the Rays have now stated they are unable to absorb these higher costs, effectively indicating their unwillingness to adhere to this crucial element of the agreement.  You are being asked to vote as to whether to approve the sale of bonds to pay their share of the cost at your meeting on Tuesday.   

Let me introduce myself. I founded and ran Raymond James Affordable Housing for more than thirty years.  We were (and while I am retired, still are) the intermediaries between developers who build affordable housing apartments, and the investors who provided the financing.   During that time, I chaired the investment committee that approved (or rejected) every deal on behalf of these investors.   The money going into these transactions was not Raymond James’ money but the money of others, and in most cases, it was the money of major U.S. banks. In those thirty years, I reviewed and approved thousands of transactions, each involving millions of dollars per project, and billions of dollars of investors’ money each year. My job was to treat the money like it was my own, or like it was the money of Raymond James. I was a fiduciary. My committee and I had to decide if the proposed investment in a deal was appropriate – (1.) were the returns projected likely to happen, (2) were the costs guaranteed by parties with sufficient capital to meet any guarantees and were the guarantees ironclad – no outs.  (3.) were all of the other risks mitigated – there were no steps from the start of construction to completion and rent-up not covered.  In reaching our conclusions we did not rely on what the developer told us or the people who brought us the deal.  Our job was to reach our own independent conclusion.   

You are in the same position, county commissioners. You are the investment committee for Pinellas County – deciding whether to approve or reject the use of Tourist Development tax revenue toward the cost of the stadium.  Just you.  You need to be assured that the money will produce benefits and there is little to no risk. You cannot rely solely on what the county administrator says; your obligation is to reach your own independent opinion. 

Keeping that in mind, here are my conclusions as to why it would be irresponsible, reckless and just plain dumb to approve the sale of bonds now – before you are called to do so in the agreement you have signed.  If I was presented with the facts of your situation in my role as chair of the investment committee at Raymond James Affordable Housing, I would not move forward and approve the sale of bonds.   

As you I am sure you know from what I have written at homerunsmatter.com and homerunsmatter.com, I have never been in favor of the terms of the Rays/Hines deal to build a new baseball stadium, nor the terms to sell Rays/Hines the 64 developable acres.  This has nothing to do with whether I like baseball.  In fact, I do like baseball. My family has season tickets to the Rays, and I have what I like to consider a star high school pitcher and hitter in my grandson.  I am not anti-baseball or anti-Rays.  I am pro-ST. Petersburg and pro-Pinellas.  

I have no axe to grind other that what matters to make lives better for our citizens, our  children and our grandchildren.  

But even having said all that, my conclusions as to why the County should not vote to approve the sale of bonds before they are required to do so are based on the facts, and your responsibilities as County Commissioners.  

My conclusions: 

There are no logical reasons for the County to do anything until Stadco (the Rays LLC) meets the conditions of the agreement.

Section 3.3 (b) of the executed Development and Funding Agreement states: 
“The County will Commence the County Bond Sale for the funding of the County Bond-Funder Contribution Amount….. within (30) days after the satisfaction …. on the conditions set forth in this Section 3.3(b) and Section 3.3(d).  There is then a list of requirements that Stadco must meet.  This agreement is between the City of St. Petersburg (the City), Pinellas County (the County),  and Stadco. (As an aside, Stadco is short for Rays Stadium Company, LLC and no one knows their financial ability to meet cost overruns – a condition of the agreement.) 

“Commence the County Bond Sale” is defined in the agreement to mean “the printing of a preliminary official statement.”   In talking with a bond expert, this term can mean anything. But to them, clearly at a minimum it means the County does not have to do anything with regard to approval of the bonds, or proceed to sell the bonds, until Stadco meets their obligations as spelled out in the agreement. 

Therefore why would the County do anything until Stadco meets the conditions of the agreement?  Normal business practice says the parties to an agreement meet their obligations according to the terms of the agreement. So why would the County  (and why did the City) approve the sale of bonds before Stadco meets its requirements?  There are no good reasons that myself and legal experts I have consulted with can imagine.    

Demonstrating Character and Trustworthiness.

It has been suggested that the reason to do this – approve the bonds before the County is required to do so in the agreement – is (a.) to signal to the Rays that the County will honor its obligations – that it is demonstrating character and trustworthiness or (b.) because the city has suggested that, in the event the Rays (Stadco)  do not meet their obligations to the deal, that  if the city and county have not moved forward with approval of the bonds before the Rays default, then the Rays keep the 64 developable acres. Pressure on the County from the City and the Rays.  Or (c) that the Rays need certainty that the County will meet its obligations.   

On July 31, County Chair Kathleen Peters signed the Development and Funding Agreement, obligating the County to move forward with the sale of bonds after the Rays meet their requirements.  By signing the agreement, the County has  stated it will meet its obligations – period, assuming the Rays meet their obligations. The agreement provides that the county does not have to approve the sale of bonds before it is required to do so.  It does not, nor should it approve the bonds earlier to prove its character and trustworthiness. The County is putting the full faith and credit of the County behind its obligation.  That virtually guarantees its character and trustworthiness.    As a result, the County does not have to, nor should it, start the bond process until provided for in the documents.  This would not be sound business practice, and in fact, as explained later, would be risky and reckless.  (As an aside the Rays owner Stuart Sternberg has not put his full faith and credit behind the deal.  In addition, as discussed below, he is even saying the Rays will not meet their core obligation to guarantee cost overruns.  Character and trustworthiness?) 

Chair Peters said in your meeting that the county should move forward approving the bonds because the County signed a contract.  “A deal is a deal.”  Chair Peters – you are right.  The County has signed a deal.  And that deal spells out the terms and conditions as to when the County must meet its obligations.  Period.   

Delaying your vote is not the reason the Rays have higher costs, as they say.  Absolutely not.  

Pressure on the County from the City and the Rays to help make sure the Rays do not get the developable land, if they terminate the agreement to build a stadium.

As I know you know, as county commissioners you owe your allegiance to the public you serve – the residents of Pinellas County.  You are legally and ethically bound to act in the best interests of those constituents.  Your fiduciary obligations center on your responsibilities as public stewards of county resources.  You must make decisions that reflect the best interests of the community as a whole.  You must maintain the public’s trust by being transparent, ethical, and impartial.  You must make informed well-reasoned decisions.  You must prioritize the interests of the public over personal or political interests.   

With that in mind, I am sure you must agree you cannot approve the sale of bonds because you are being pressured by the City and the Rays.  As Chair Peters said publicly at the meeting on Thursday, December 12, the 64 developable acre deal is between the City and Rays.  It has nothing to do with your decisions.  So don’t let the City’s issues for the balance of the land influence your decisions.  To do so would violate your allegiance to your responsibilities.   

Chair Peters also said at the December 12 meeting that you don’t have to worry about having taxpayers being critical of your decisions regarding funding a stadium because the County is not spending taxpayers’ money – the money is Tourist Development Tax money paid for by tourists.  I believe she has this all wrong.  In making decisions about the TDT, you cannot disregard your obligations to the residents who rely on tourism. According to Visit St. Pete/Clearwater 90,000 local jobs are supported by tourism, including hospitality, dining, entertainments, and other services that cater to visitors.  In 2021, according to Visit St. Pete/Clearwater, tourism-related jobs in the County accounted for $2.9 billion in wages.  For Chair Peters to say don’t worry about what taxpayers will say about your decisions as to how you spend TDT as they won’t care – that you have no fiduciary responsibility to the taxpayers regarding the use of these funds is outright wrong.    

The County needs to provide certainty to the Rays.

At your December 12 meeting, Commissioner Scott said the reason to vote now is that the Rays need certainty – that the bond money will be there. 

I have already covered this in (a) above.  The obligation that the County will be there with its $312.5 million when required is an obligation of Pinellas County.  The Rays have the full faith and credit of the County behind that obligation.  To suggest the Rays need more than that, more than the requirements in the agreement from the County, is ridiculous.   If they had really wanted something different, why didn’t they negotiate it into the the agreement.    

For Commissioner Scott to talk about the Rays needing certainty, when the Rays have said they can no longer afford to pay the higher costs “alone”, a condition of the stadium agreement,  is backwards.   It is the County that needs more certainty from the Rays.  At your meeting, Commissioner Latvala pointed out what the Fisher family, owners of the A’s, that is involved in building a new stadium in Las Vegas, have said.  Per the New York Times, Sandy Dean, a spokesman for lead owner John Fisher: “The increases in costs of the stadium are the responsibility of the team.”  Per the Times, Dean also said: “ Fisher’s group (of which Dean is a party) will foot the bill for the increases…. and that would be the case if future price hikes follow.” 

In the case of the Rays, Stuart Sternberg, the principal owner of the the Ray has said nothing about his obligations.   He has only caused uncertainty.  Therefore, why wouldn’t you wait to vote until you, and the other commissioners, an all of us are provided with clarity?   

The County should not approve the bonds, therefore turning over to staff responsibility for reviewing whether the Rays have met the requirements of the agreement – requirements if met, will result in the County selling bonds – because some of the requirements are subjective.

While it is reasonable for County staff to review and either approve or reject clear cut requirements as to whether the Rays have met those requirements for the County to go forward with the sale of bonds, all the requirements are not clear cut. Therefore, it is incumbent upon you, the Commissioners, in your role providing checks and balances, to be satisfied as to whether the Rays have indeed met the requirements.    

• Section 3.3 of the agreement –Conditions to Commencement of the City Bond Sale and the County Bond Sale – has Rays’ requirements, not all of which are clearcut.  
• Section 3.3 (b) (v) states “Stadco has provided evidence acceptable to the County of Stadco’s capacity to fund the Stadco Contribution Amount… including (A) Stadco’s plan of finance for the Project Improvements.”  Who should decide what is acceptable – staff or you, the Commissioners?  
• Section 3.3 (d) (iii) – “The County has Approved the then-current Project Budget and then-current Project Schedule, which must be dated within 15 days prior to the Commencement of the County Bond Sale.   Who should decide whether the Project Budget or the Project Schedule is consistent with the terms of the deal – staff or you, the Commissioners? 

Are these requirements that should be turned over to the County staff?  Are these requirements that fall under your fiduciary responsibilities – your responsibility for checks and balances?   I believe these requirements must remain with you, the Commissioners.      

The city has created a mess. 

The County should wait until the City cleans up the mess it has made, and the deal has clarity. If the County doesn’t, it risks losing $6-10 million.

The team has said that with higher costs they cannot fund the costs alone. They have said there is a funding gap. How could it be clearer—the Rays are saying they can no longer meet the terms of the agreement—to fund cost overruns. The city has said they will work on the problem and in no way will they bring back a deal to solve the problem that will require any more money from the city and the county. The Rays won’t explain their position—are they or are they not going to fund cost overruns? They won’t say. What they say is, “The Rays have fulfilled their obligations to date and continue to wait for decisions and actions by the City of St. Petersburg and Pinellas County.” 

What are the Rays doing? Why don’t they just come out and say the deal no longer works and that we need to try to work out a new deal? Is it because they know the deal does not work, they plan to move the team elsewhere but want the city and county to cancel the stadium deal first so the Rays still get the 64 acres to develop—and buy the land at what many people believe is at cents on the dollar? Remember, there was no current appraisal before they set the price.  Or are they saying let’s all keep moving forward and see if we can fix the cost gap problem? Or are they saying something else? In any event, it seems clear we have no commitment from the Rays to pay cost overruns. With this confusion in mind, and since your  obligation is to the county and the $312.5 million, should you vote to approve the sale of bonds before this confusion is cleared up? And if so, why? 

Whatever is going on there, is no clarity.  And without clarity there can be no upside for the County to approve the sale of bonds – for all the reasons stated above.  There can only be risks – risks the County has no obligations to take.     

What if this uncertainty as to whether the Rays are going to meet their core obligation is not resolved, you approve the sale of bonds, and the Rays meet their obligations that require the County to actually sell bonds?  And then the Rays default.  You will have to unwind the bond sale and you will have incurred bond closing costs of $6 – $10 million.   While the agreement says the Rays are required to pay the County for these costs, the Rays just defaulted.  Are they going to pay?  How long will you be in court?  And, the agreement to repay the County is with an LLC, guaranteed by another LLC –  not a guarantee from Stuart Sternberg, the team owner who we think has a high net worth.   

Commissioner Scott has said there are risks in all transactions.  That is true, but if there is no need for the County to take a risk, both the risks you know about and those you don’t, you Commissioners have an obligation to not allow the County to take those risks.  Approving the sale of bonds before there is clarity as to whether the Rays have not met the terms of the agreement is a risk you should not take.  

The City negotiated a very sloppy agreement relative to the rights of the Rays to the 64 acres. They should have more clearly tied the Rays rights to the 64 acres to the Rays requirements in the stadium agreement and they are worried.  But Commissioners, that is not your worry. 

The city should be clearing up these issues with the Rays now, before more confusion is created, and any parcels are taken down.

If you approve the sale of bonds, the mess that the City has created puts each of you in a position to be criticized by all the voters in Pinellas County.  It will appear you helped facilitate the Rays taking advantage of the City.

It appears that during this period of uncertainty (caused by the Rays) as to  whether the stadium deal will actually happen, the Rays can start to buy parcels of the 64 acres of prime development land.

Imagine this.  The Rays take down as much of the 64 acres that they can.  Then the stadium deal is terminated.  There is no stadium, and the Rays own the valuable developable land at a price well below market.  (There was no updated land appraisal before the deal was signed.)   

The public, will be asking, as they should, why did you County Commissioners approve the sale of bonds that kept the deal moving forward long enough for the Rays to take advantage of the delay and screw the taxpayers.  If you did not approve the bonds and told the city to move quickly to resolve the problem, you would have done the correct thing. 

Approving the bonds, runs the risk that the County is complicit in providing the Rays with a position that the City and County have waived the requirement that they must pay cost overruns.    

Are you ready to move forward and approve the sale of bonds when the Rays have now said “higher costs that we are not able to absorb alone”

You are ready to accept that if he deal moves forward without clarity regarding the Rays obligation to pay cost overruns, and for whatever reason costs go up,  and the Rays don’t pay them – you are willing to live with the consequences? A vote that does not answer the question – how might this this end.  And a vote that might end like this – a half-built stadium, the county loses $312.5 Million plus interest. The County  loses the taxes from the development of the rest of the property for many years because the property cannot be  developed while the city and the Rays in court.  And at the same time more hurricanes hit Pinellas and there is not enough money  to repair the beaches.  You, the  county commissioners will have to answer -how did you let his happen.  How are you going the answer the question – Why before you approved the bonds didn’t you require the deal to be cleared up so this did not happen? 

What should the County do – what should you do as Commissioners? 

It is unfortunate that the City has put the County in a position, where the impression is given that the County must act differently from its obligations under the stadium agreement.    

With all this in mind – county commissioners: 

1. 1. Defer any vote to approve the sale of bonds.     

2. 2. Confirm no deal terms can be changed without the deal being approved again by the county commissioners.

      I don’t see how it is possible that the deal will move forward without material changes to the agreement.  Any changes, including how the guarantees are being addressed, would be material changes that must be approved by you. For example, if the city came back and said that any gap now known or in the future will be filled by some other guarantor, get confirmation that that is a change in the deal that requires commissioners’ approval.  

3. 3. Tell the City of St. Petersburg to clean up the mess now.

      I strongly suggest you advise the City to go to court as soon as possible and file a suit for a declaratory judgement.  In court, the city would state that they have met their obligations to date and will continue to meet their obligations. 

      Ask the court to decide (1.) Is  the City  (and the County) obligated to move forward based on the letters and comments from the Rays, (2.) Did the Rays end the deal, and (3.) Did the Rays end their rights to the 64 acres.   

      Attached, is the opinion of William Ballard. While now retired, Bill was the President of the St. Petersburg Bar Association, and was a highly respected  member of bar, having represented among others Pinellas County Schools, the FDIC, and the Resolution Trust Company.   

      Bill states clearly that the city and the county should not take any steps that commits public funds when the Rays have demonstrated an unwillingness, and/or a financial inability to honor a core obligation of the agreement to build a new stadium.  The appropriate next step is to seek guidance from the courts.  The City  (and the County) are not repudiating their responsibilities, but need to know where the deal stands before they commit $600 million.  

      If the City chooses not to go to court or to take other appropriate action, the County, delaying any vote approving the sale of bond, will eliminate all risks to the County.  Risks that the County  should not take.   

Background information: 

The county approved a deal to commit $312.5  million toward the stadium.  But things have changed since the county approved the deal. You met on October 29 to discuss approving the bonds but voted 6-1 to postpone the decision for various reasons – questions about financial details and concerns about the impact of two hurricanes and other matters.  As I see, if you wanted more time to assess everything.  And you had every right to postpone the vote – the county attorney said so.  In fact, he said you did not have to move forward to approve the bonds until the Rays meet certain conditions and that might not happen until some time in March.  

You did schedule a second meeting on November 19 to reconsider and potentially hold a vote on the bonds. 

But before you could vote, the Rays sent you a letter stating that because you did not approve the bonds at the October 29 meeting (just 3 weeks before) , a new stadium could not be completed in 2028 as planned but it would not be be completed until 2029. And as a result, the letter indicated that a 2029 ballpark delivery would result in “significantly higher costs that we are not able to absorb alone.” The Rays also stated they have stopped moving forward with any work towards a new stadium and have instructed their architects, builders, and consultants to suspend work. 

As a result at that November 19, it seems reasonable why some of you considered the Rays letter an attempt to put pressure on you – that the stadium delay and increased costs was your fault for not approving the deal at the first meeting. And at the second meeting, when you again asked your lawyers if you were obligated to approve the bonds now, that if we did not, would the county have liability. The answer came back – no. 

So, at the second meeting, as a result of this letter, which created uncertainty about the deal—a deal where the Rays are obligated to cover all cost overruns—the situation became even more complex and concerning. Their letter also stated, “We stand ready to work on a new solution,” which added to the confusion. The Rays had guaranteed cost overruns, then the letter said they couldn’t pay them, and now they wanted a new solution. 

Due to the confusion—it was reasonable for you to be asking – is the team going to meet their obligations under the agreement to pay overruns or not?—As a result, of this and other things, you again delayed the vote until December 17, I think in part to get clarity – do we have a deal.   Exactly what I would have done in my investment committee.   

It didn’t help that the letter suggested your vote at the October meeting was a formality, implying you had to vote yes. This was clearly not the case – per the County attorney, you absolutely did not have to approve the bonds then. As a result of the confusion and still grappling with the aftermath of the hurricanes, decisions to be made about fixing the heavily damaged existing stadium, and the resulting economic challenges, you delayed the vote again—which you had every right to do. 

In that first letter, the Rays stated that by not voting on October 29 and not voting until November 19, the delay of 20 days pushed the stadium’s completion back a full year. They also mentioned that it was known and accepted that approval of the sale of bonds was needed prior to the November 5 election. By the time they sent the letter, they knew the composition of the commission had changed, and there was a pretty good chance the new makeup would not have approved the bonds. No agreement between the Rays and the city for a new stadium said the county had to approve the bonds before the November 5 election. If that had been so important, the Rays would have put it in the agreement. They are smart guys. 

County Chair Peters sent the Rays a letter asking them to provide clarity – is the agreement terminated as a result of the Rays’ inability to cover cost overruns.  The Rays’ response did not address the question. They said that they always made it clear that the viability of the project depended on a vote by the county before the November election. They also stated that they would not have gone forward if a changed makeup of the county commission in November “had the ability to revoke the approval.” I don’t know where they got that impression as it is not in any agreement. And they did not answer the question – will they honor the guarantees.