El Paso cannot afford the Downtown arena planned for Duranguito, so it must be terminated

Max Grossman, Guest column Published 10:39 a.m. MT April 24, 2020 | Updated 11:11 a.m. MT April 24, 2020

We are facing a global pandemic and the worst financial crisis in our city’s history, with 28,366 jobless claims in our region from March 15 through April 10. Entire commercial sectors have been decimated, hotels and restaurants are closing, and bridge traffic has slowed to a trickle.

Yet our local elected officials cling to a false hope that building a $180 million arena with bond funds will somehow drive economic development.

As things stand, the city has amassed $2.04 billion in debt. The city property tax is now $0.91 per $100 of valuation, up 38% from 2014 and the highest among major Texas cities. El Paso’s population is stagnant and in 2018 declined for the first time since the Great Depression.

Wall Street credit rating agencies have noticed. On Dec. 10, Moody’s claimed that in the event of a major recession, El Paso will be one of four cities in which “adjusted net pension liabilities will rise by more than 100% of revenue.” This month, Fitch downgraded the city’s “A” rating on general revenue airport bonds from “Stable” to “Negative.”

On April 13, the city’s CFO Robert Cortinas revised the projection for the current fiscal year from a surplus of $6.1 million to a shortfall of $26.4 million — a gross underestimation, given the obvious decline in revenue from the sales tax, hotel occupancy tax, franchise fees, licenses, permits and other smaller revenue sources.

City Manager Tommy Gonzalez plans to reduce employee salaries 1% to 5% for 12 weeks starting May 24. Scores of services have been suspended, including the streetcars. The Butterfield Trail Golf Course has closed permanently. About $6.6 million in street funds will be diverted to the general fund and the police academies may close.

Against this backdrop of deficit spending, high taxation, and economic hardship is the city’s plan, described in its own RFQ, to build “a state of the art arena with a target capacity of 15,000 seats for basketball games, that includes approximately 24 private suites, 30 loge boxes and 500 club seats.”

The 2012 ballot proposition entitled “Museum, Cultural, Performing Arts, and Library Facilities” never mentioned “arena” or “sports.”

The city claims it will build the arena for $180 million, or $12,000 per seat. However, the cheapest multipurpose basketball arena of comparable size built in the past five years is Fiserv Forum in Milwaukee, seating 17,341 and costing $32,178 per seat.

Mathematically, our arena would cost $482,671,000 in 2019 dollars, not including the $23 million-plus already spent on bond interest, property acquisition, and litigation.

Consider also that the 27 G-League teams during the 2018-2019 season averaged only 2,436 fans per game.

Even if one denies the cultural significance and economic potential of Duranguito, the first settled place in El Paso, and supports eminent domain to force El Pasoans from their homes for an entertainment venue, there is no denying we cannot afford an arena, which, like our ballpark, would cost more than three times its advertised price.

According to Christian Britschgi in the current issue of Reason Magazine, “targeted subsidies for things like stadiums and hotels don’t make economic sense even in good times” and “in the midst of a global pandemic, they’re devastating.”

Our City Council must terminate this project and, if they wish, divert the bond funds to projects that are actually authorized in the bond language and can be completed on budget.

Max Grossman is an architectural historian.