If the Tampa Bay Rays stay in St. Petersburg, who will pay for a new ballpark?

ST. PETERSBURG — The easy part happened Monday when Mayor Ken Welch selected the Tampa Bay Rays’ proposal with global real estate developer and investor Hines to redevelop Tropicana Field and the 86 acres around it.

The hard part comes now. The city of St. Petersburg, Pinellas County and the Rays will hash out how a potentially $1 billion, 30,000-seat, open-yet-covered ballpark plays into the overall redevelopment and how much each side is going to pay for it.

According to a December draft outline of a term sheet for the development of a new ballpark, the team, county and city would all share in the cost, including construction overruns — provided the Rays agree to a 30-year lease. But what exactly will that look like?

“Until we had the mayor’s announcement, we really couldn’t move that forward,” said Pinellas County administrator Barry Burton, who’s been leading negotiations with the Rays. “Now’s the time where we start to do the heavy lift.”

In a statement, Rays president Brian Auld said the team was prepared to pay its share.

“We know that we are going to have to contribute more to the ballpark than we once thought, because that is what it is going to take to remain in Tampa Bay,” he said. “That has been the goal from Day 1.”

Bonds, bed taxes and beyond

The estimated $1 billion price tag of a new Rays stadium tracks with that of Major League Baseball’s newest ballpark, the Texas Rangers’ Globe Life Field, which opened in 2020 at a cost of $1.2 billion.

The Rays have given some indications that they’d be willing to finance half of the cost of a new stadium. In 2021, while pitching a plan that would split seasons between Tampa and Montreal, the Rays suggested a price tag of $700 million, with the team paying half.

In its request for proposal, the city said “a minimum of” $75 million in downtown property tax revenue would be spent on infrastructure, including stadium improvements. The team’s proposal asks for $150 million in public funding for infrastructure. Burton said the city and county would have to approve any additional property tax revenue above the $75 million already promised, but for now, “that’s not something we’re discussing.”

The Intown Community Redevelopment Area, where Tropicana Field is located, is a type of special tax district designed to improve redevelopment projects. The new St. Pete Pier, renovations to the Mahaffey Theater and even some construction and renovations for the Trop were paid for with revenues from this tax district.

In their proposal, Hines/Rays suggested creating a new tax district as a funding source. That would require taking the Gas Plant District out of the Intown zone and placing it into the new special tax district. County commissioners would have to approve the move. A third-party analysis of the proposal commissioned by the city said the impact of such a move would be unclear, but as is the case in the current special district, the city would bear some financial burden.

When it comes to county funding, a main source the Rays will seek is a 6% bed tax on hotel stays and short-term rentals, a pot of money that in its most recent year generated $94.7 million. By law, 60% of bed tax revenues must fund Visit St. Pete-Clearwater and other marketing initiatives; the remaining 40% must go toward beach nourishment and capital projects for tourism draws.

Burton said the Rays have thrown out “all kinds of numbers” regarding a potential bed tax request. But they’ll have to compete with other projects. The Dalí Museum, which was awarded $17.5 million for an ongoing expansion in 2019, has asked the county for another $15 million as the project’s scope has expanded. Meanwhile, Clearwater Mayor Frank Hibbard has signaled an intent to seek bed tax funding for updates to the Philadelphia Phillies’ spring training complex, which could cost up to $300 million.

Hibbard — a member of the Tourism Development Council, which advises county commissioners on bed tax spending — said the Phillies’ request should be coming by spring. Considering Clearwater hotels’ contributions to the bed tax, he said he expects the team to get its funding.

“We’re entitled to get some of that money in north county,” Hibbard said.

The county can also use bed tax money to pay down debt on city bonds issued to pay for the construction or renovation of a pro sports stadium. That happened in 1996. At the urging of the soon-to-be Devil Rays, Pinellas then raised the bed tax by 1% to pay debt on St. Petersburg bonds designed to make the Trop ready for Major League Baseball.

So far, Burton said, the bed tax is the only county funding source he’s discussed with the team.

“I would venture to say that commissioners would be in unison that that would be the only source of funds,” he said.

Welch has indicated St. Petersburg wouldn’t go overboard with its bed tax request.

“We want to make a request that is reasonable,” Welch said during a news conference following his announcement for a developer on Jan. 30. “And right now the focus is for the stadium, not any other uses of the bed tax on the site.”

In theory, the county could pay in other ways. St. Petersburg and the Rays could request their share of receipts from Penny for Pinellas, a 1% sales tax revenue spent on countywide projects.

But one or more city bonds backed by county bed taxes or other revenue sources seem likely, Hibbard said. If that happens, whatever amount the three sides agree upon could rise significantly when factoring in the interest.

“You’re going to be putting more in because you’ve got debt service,” Hibbard said. “Let’s say it’s $500 (million) total. That’s more like $800 million when all the interest is added in. Especially with interest rates being where they are right now.”

A ‘strong financial package’

Excluding the ballpark, the Rays’ estimated total construction costs for the project at $4 billion. They plan to raise $1.8 billion through financing.

Once construction of the residential, commercial and senior living properties is completed, Hines and the Rays would buy each parcel from the city at an agreed-upon price.

The land under the ballpark would remain Pinellas County’s, leased to the team for three decades. And the ballpark would be open to the public when not in use for baseball. The city and county would be able to host a certain number of community events at the park each year. That could be another source of stadium funding.

One estimate from a New York investment bank hired by the city and county to help broker a stadium deal found that local governments could see $9.4 million in annual revenue from sponsorships, rentals and events, including parking and ticket surcharges and sales tax on things like concessions. Over 30 years, that works out to about $129 million in today’s dollars.

Welch, who spent 20 years as a county commissioner, said he chose the Rays and Hines proposal in part because of the team’s strong financial package” and his own personal track record of working with Rays officials.

“They have never once not been honest and forthcoming in my work with them as a county commissioner on any issue,” he said Monday. “I expect that to continue.”

St. Petersburg City Council member Ed Montanari said the council has not been briefed on any recent details. He is a supporter of keeping the Rays in St. Petersburg, but as a self-proclaimed fiscal conservative, not at any cost.

“They have to pay their fair share,” he said.

Times staff writer Marc Topkin contributed to this report.