City leaders think sales tax is best way

There are lots of ways to pay for an arena, but Mayor Mick Cornett said city leaders thought the choice was obvious in Oklahoma City.

The Ford Center was built with money from the original MAPS sales tax.

It just made sense to continue the temporary 1-cent sales tax, which was already extended to pay for MAPS for Kids, Cornett said.

If voters approve the Ford Center tax, it will go into effect Jan. 1, 2009, the day the MAPS for Kids tax is set to expire.

"Our citizens seem to prefer a sales tax initiative to other concepts,” Cornett said. "This is following the model that was created by MAPS. MAPS is a proven entity to our voters.”

No other NBA arena was funded exclusively by sales tax money, according to the National Sports Law Institute of Marquette University Law School.

Some have complained that a sales tax has a bigger effect on those with lower incomes.

Cornett said Oklahoma City is limited in its options. Some cities get enough revenue from smaller fees and taxes, such as a hotel and motel tax, to afford a large arena renovation.

That doesn't work in a smaller market like Oklahoma City, where there isn't enough revenue from such taxes to pay for improvements up front.

"You really have to understand that the Oklahoma City market is not the New York City or Chicago market,” Cornett said. "The business model here is different.”

Oklahoma City would be the third smallest television market with an NBA team if owners approve an application by the Seattle SuperSonics to relocate here.

Only New Orleans and Memphis are smaller.

Doug Elmets, a political and media consultant for an unsuccessful sales tax campaign to build an arena in Sacramento, Calif., said arguments against a sales tax were effective there, where 80 percent of voters rejected the proposal when it went to a vote in November 2006.

A sales tax is difficult for a lot of people to stomach "especially when it's for a sports team that not everybody can afford to go to,” Elmets said.

Another funding plan that has worked in other cities, like Memphis, is a revenue bond, which involved borrowing money up front and paying it back by charging a tax or fee on tickets sold at arena events.

Cornett said charging a fee on tickets is a bad idea in Oklahoma City because NBA owners still have to be convinced a team can be profitable here. Increasing ticket prices before the arena is built is not a good way to make that case, he said.

"The idea that the projects need to pay for themselves has never been our model. We didn't expect the (Bricktown) canal to pay for itself,” he said.

Many cities also use traditional bonds, which are paid back by property taxes over several decades.

Cornett said he doesn't like that idea because it incurs long-term debt for an arena that might be obsolete by the time the bonds are paid back.

"I am very aware of how other places do it, but you've got to realize Oklahoma City is not those other places,” Cornett said. "People here like paying cash. I want to use the same method people are comfortable with.”

Contributing: Database Editor Paul Monies and Staff Writer John Estus