SAN ANTONIO – Voters will decide on two Bexar County propositions in the Nov. 4 election, both related to the Spurs’ potential relocation to a new arena in downtown San Antonio.
The price tag for that arena, which would be located at Hemisfair, is estimated at $1.3 billion.
Here’s how the proposed funding structure for the new Spurs arena will work. It would utilize a combination of tourist taxes and contributions from both Bexar County and the City of San Antonio.
Prop B
If approved by voters, this proposition focuses on the funding Bexar County would contribute to a new Spurs arena.
Proposition B asks voters to approve two sources of arena funding:
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Bexar County’s existing 5% car rental tax.
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Bexar County’s portion of the local Hotel Occupancy Tax by increasing it from 1.75% to 2%.
“This is no cost to you or I as homeowners, no cost to renters, doesn’t impact our sales tax,” said Bobby Perez, chief legal counsel for Spurs Sports & Entertainment.
Bexar County Judge Peter Sakai calls it a “tourist tax,” adding that money generated from those sources cannot be used to pay for things like streets, sidewalks, schools or housing.
By state law, the county can only use those taxing sources to “promote tourism and the convention and hotel industry.”
If Prop B passes, Bexar County agrees to contribute up to $311 million or 25% of the cost of the new arena — whichever is lower.
Prop A
Proposition A promises to keep the Frost Bank Center, the current home of the Spurs, and the Freeman Coliseum grounds next door viable.
“The Frost Bank Center cannot become the next Astrodome that sits in Houston, Texas,” Sakai said.
Prop A asks voters to approve dedicating an estimated $192 million to $198 million toward turning the Frost Bank Center and Freeman Coliseum into year-round rodeo grounds.
Both facilities are owned by Bexar County.
This proposition would use the same funding sources as Prop B:
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The 5% car rental tax.
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Hotel Occupancy Tax, increased to 2%.
The San Antonio Stock Show & Rodeo would become the main tenant of both locations, allowing the organization to operate well outside of its 21-day season each February.
During that time, the Spurs hit the road so the rodeo can hold nightly shows inside the Frost Bank Center.
“Their economic impact on an annual basis for those 21 days of operating is $300 million,” Perez said. “I think we’ve all outgrown the space. The rodeo is ready to run more days. We’re ready to transform our operations into a future place-making, not only for Spurs, but for the community of San Antonio.”
Elections
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Know before you vote
Above the description of each proposition on the Bexar County ballot, it states, “THIS IS A TAX INCREASE.”
That wording is required by the state anytime a school board or municipality proposes adjusting a tax rate. The wording is present regardless of whether or not voters will actually pay more in taxes, should the proposal pass.
The county taxes are allocated for the upkeep of parks, multi-sport facilities, youth sports programs, the Frost Bank Center, the Tobin Center and other venues.
What the Spurs would pay
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$500 million for the new arena.
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Any additional costs that go over the contributions from the city and county.
The Spurs also agree to guarantee $1.4 billion in development around the arena, which would contribute to the city’s portion of arena funding.
More on that below, but first: Why can’t the Spurs pay for the arena on their own?
“We, the Spurs, we’re one of 30 teams across the country. We are the 27th out of 30 market sizes. And all the teams in our area have publicly funded facilities,” Perez said.
The Spurs generate less revenue due to their position near the bottom of NBA market sizes, compared to teams in larger markets.
“Oklahoma City, probably the most recent one, has passed a vote with sales tax that’s 95% funded by the public,” Perez added. “That is not uncommon for market sizes like San Antonio, Oklahoma, Memphis, Indianapolis. All have public funding sources for their facilities just because of the way the size of the markets versus the Los Angeles, a Chicago, a New York.”
The deal for a new Spurs arena would NOT include new sales taxes.
The Spurs would also sign a non-relocation agreement with the city and county as part of the new arena deal, meaning the organizations would promise to stay in San Antonio for another 30 years.
An assist from the city
The City of San Antonio agrees to contribute $489 million, or 38%, of the cost of the new Spurs arena — whichever is lower.
Approximately 52% of the city’s funding would come from:
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Rent: The Spurs would be the tenant of the arena and pay the city rent to use it. In addition, private developers would pay the city to lease the land around it.
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Guaranteed development: The Spurs and their private partners promise $1.4 billion in development around the arena. The city will collect the property tax growth spurred by that development and put it toward the arena.
However, those funding sources do not exist without the creation of the arena and the agreement that comes with it.
What if the city doesn’t get the money it’s expecting from that property growth?
“The Spurs and the developer would be contractually obligated. And we would not make any contribution towards the arena until those things occurred,” San Antonio City Manager Erik Walsh said. “So, everything has got to happen at the same time.”
“It becomes a Spurs obligation and obligation of its partners,” Perez said.
The other 48% of the city’s financial contribution would come from that same Hotel Occupancy Tax that Bexar County could tap into.
Here’s how: the State of Texas collects a 6% fee on hotel stays in San Antonio.
The city can use that money to pay for a project in a three-mile zone around Hemisfair.
It’s called a Project Finance Zone, which was made possible in San Antonio by state legislation passed in 2023.
“We can use it for expanding the convention center. We can do it to improve the Alamodome, and we can utilize it for a new arena,” Walsh said. “Those are the only three uses that we can utilize that state revenue on.”
The money is held by the state comptroller until the city has an approved project.
“If we don’t do any of those three projects, then the state will retain that money, and it will go into the state’s general fund,” Walsh said.
Under state law, like the county, the city cannot use the money from the hotel tax on things like street maintenance, police officers or other core services.
The city’s portion of the arena funding is not up for public vote. Instead, it will be decided on by San Antonio City Council.
What if Prop B doesn’t pass and the Spurs don’t get county funding?
“We think once the voter learns that it’s funded by visitors, there’s no impact to them as taxpayers and it leverages almost another $2 billion by our companies, they’ll see it as a good deal, and they’re going to pass it,” Perez said.
Will the Spurs leave San Antonio if they don’t get a new arena?
“I’m going to stick by my answer,” Perez said. “We’re optimistic and excited they’ll say yes to Prop A, and they will say yes to Prob B.”
Early voting in Bexar County is Oct. 20-31. Election day is Nov. 4.
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