Questions About SB 110?
Oregon Senate Bill 110 (SB 110) is an update to Senate Bill 5 (SB 5), which was originally passed in 2003 to support the development of a Major League Baseball (MLB) ballpark.
SB 110 increases the bond cap to $800 million to contribute to construction of the ballpark. The bonds would be utilized only if Oregon wins an MLB team. This bill provides a significant economic opportunity for the state of Oregon without additional burden to taxpayers or creating risk for the state.
Overview
Key Points
No New Tax on Oregonians: SB 110 does not introduce a new tax for Oregon residents. Instead, it dedicates incremental growth to create a sustainable source of revenue for the state.
Player Income Taxes as Repayment: The bonds will be repaid over 30 years (or sooner) through income taxes from MLB players and employees, both home and visiting.
New Revenue for Oregon: Once the bonds are repaid, all revenue generated from the tax on MLB players and employees will be directed to Oregon’s General Fund. This new and long-term revenue stream (could be $75 Million per year or more depending on future market conditions) can be used for essential state priorities, such as schools and infrastructure.
No State Taxpayer Risk: The bonds would be issued by a local public entity (likely a stadium authority) in order to achieve tax exempt status. The bonds would be secured by the revenue dedicated by the state, but would NOT be backed by the full faith and credit of the State, and would NOT be the responsibility of Oregon taxpayers. If the MLB team defaults or relocates, Oregon is not on the hook for the bond repayment.
A Proven Model: Economists modeling various market scenarios for the Portland Diamond Project have projected that up to $900 million in bonds could be repaid over the 30-year period.
Historical Context
SB 5 (2003): SB 5 laid the groundwork for funding the construction of a major league baseball stadium. The bond cap was set at $150 million in 2003. While the economic landscape has evolved over the past two decades, the underlying goals remain the same.
Modernizing for Today: SB 110 updates SB 5 to reflect current economic realities and modern financing mechanisms. By raising the bond limit to $800 million, it aligns with cost inflation while maintaining a fiscally responsible approach.
FAQs
What is Oregon SB 110?
SB 110 proposes increasing the bond limit to $800 million to be used for construction of a Major League Baseball ballpark. It updates SB 5, which passed in 2003 at set the bond cap at $150 million.
Is this a new tax on Oregonians?
No, SB 110 does not introduce a new tax for Oregon residents. It leverages new revenue from MLB player income taxes if Oregon wins a team.
How will the bonds be repaid?
The bonds will be repaid within 30 years using income tax from MLB players and employees, from both home and visiting teams.
When would the bonds be issued?
The bonds would be issued and utilized only if Oregon wins an MLB team.
How does the timing of this all work?
After an MLB team is awarded, the state will forecast new anticipated income tax revenue to be directed to a control account. The local entity that will issue the tax-exempt bonds and a rating agency will work to value and rate the bonds to be sold, based on revenue projections and interest rates at the time of issuance. As stadium construction begins, PDP will fund the equity required to start construction and bonds will be sold to private investors. The bond proceeds will pay construction and infrastructure costs after PDP's equity investment is funded.
How does that process work after a franchise award but prior to the team beginning to play?
The State forecasts revenue generated from the team payroll. This revenue forecast and interest rates will dictate the final bond proceeds that can be supported (up to $800M).
A revenue bond is issued to raise funds (up to $800M) for stadium construction or related infrastructure. Private Investors buy the bonds and provide upfront capital to the issuer (PDP or a stadium authority). The stadium is built using a combination of equity, bond proceeds and other debt as needed.
What happens when the team starts to play?
As the team begins to operate, players and staff payroll start. The income tax revenues on payroll are collected by the state and placed into a special fund.
The collected revenue is used to pay bondholders (interest and principal) over time, most within the 30 year maximum period of time allowed in the legislation. No general funds are used to pay bonds. The bonds are secured and owned privately.
What happens after the bonds are paid off?
After the bonds are paid, all tax revenue generated from MLB players’ salaries will go into Oregon's General Fund, supporting schools, infrastructure, and other state priorities.
Who is responsible if the MLB team defaults or moves?
Oregon taxpayers are not responsible if the MLB team defaults or relocates. The bonds are issued by a local entity and risk is evaluated by the private parties that purchase the bonds based on the identified revenue sources.
What is the history behind SB 110?
SB 110 updates SB 5 which was passed in 2003 and aimed to fund a Major League Baseball stadium. The new bill raises the bond cap to $800 million to reflect current economic conditions.
Is SB 110 considered financially sound?
Yes. Economic modeling shows that up to $900 million in bonds could be repaid over 30 years. However, the actual amount of the bond issuance will depend on market conditions at the time of issuance, and ultimately the amount that can be supported within a 30 year maximum repayment period. The $800 million is not a commitment for state resources, it is a maximum limit that can be supported by dedicating the identified income taxes and will be evaluated based on future market conditions.
