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Opinion: Majority of New Arena Cost Will Be Paid By Renters and Businesses

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Augusta has many serious problems including blight, homelessness, lack of affordable housing and crumbling infrastructure. Building a quarter of a billion dollar arena while those issues are grossly underfunded and unaddressed is both fiscally irresponsible and morally bankrupt.

When spending $250 million, I think it’s important to consider what else could be accomplished with the money. If we as a community are willing to pay more in property taxes, why not spend the new revenue on solving blight, homelessness and infrastructure problems? 

At the cost of $12,000 per home, you could demolish more than 20,000 blighted houses.

Based on the figure of 500 homeless people per the 2020 Census preliminary count, you could build each one of them a house worth $500,000.

Storm water pipe costs between $10 and $15 per linear foot. If you double that cost (since the city would be hiring the vendor at $30 per linear foot of pipe), you could run over eight million feet of new storm water pipe.

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With $250 million, you could easily solve the homelessness crisis, demolish every blighted structure and fix all of the storm water infrastructure, thus getting rid of the need for the storm water tax. Paying a mere $8 per month for those results would be a proposal I could get behind. Solving those three issues would create an economic impact that generates enough revenue for the city to more responsibly build a new arena later.

The question now becomes what really matters to us as a community. Is it concerts and shows at a new arena? Or is it solving real problems that affect all Augustans every day?

As a property owner and business owner downtown, I would love to see a new arena built; however, the current proposal would damage Augusta and its residents to the point that I cannot support it.

On a positive note, the progress on a new arena has moved past the insane Regency Mall land lease suggestion to the right location and design. The Augusta-Richmond County Coliseum Authority should be commended for the work and efforts members have put into the project. While the members of the current coliseum authority seem to be organized and effective, that could change with one election. It’s important to keep in mind that the appointments to that board are political in nature.

Chief of my arguments against the arena is that it will hurt the rental market — and in particular, lower income renters. The suggestion that homeowners will pay $8 per month is not realistic and is simply trying to skew the math to make a bad deal palatable to the masses. I don’t believe anybody is buying that math, whether the person is for or against the arena.

Richmond County has roughly 90,000 housing units, roughly half of which are rentals, and the other half are occupied by the owners. The average home value is $190,000, according to census data. That one fact quickly shows that the $8 per month is really $182.40 per year.  Anyone can easily see how the $8 per homeowner per month verses $182.40 per homeowner per year gives very different messages, even though both statements may be true.

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Based on the $8 per month figure, owner-occupied residences will bring in $1.44 million of new tax revenue. The rest will be made up from other parcels of land, commercial property and residential rental units.

That figure is derived by multiplying the 15,000 owner-occupied structures with an average value of $190,000 at $96 per year, equaling $1.44 million.

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What I have not seen addressed publicly is how the $100 per $100,000 tax will affect rentals and commercial property owners.

What the leadership of Richmond County never seems to understand is that every single dollar that taxes get raised is passed through to renters, whether it’s property tax, utility increases, streetlights or storm water tax.

If homeowners are going to pay $182 per year, what will renters pay? Has anyone asked this question yet? The easy answer is that renters are going to pay their fair share, if not more than the homeowners who occupy their property rather than renting it.

Take Canalside Apartments located at 1399 Walton Way as an example. The property has 106 units with an average rent of $1,263. The tax assessed value is $12.8 million. Based on a simple formula, each unit would incur an increase of over $120 per year. This wouldn’t be such a bad thing if rents were not already increasing rapidly. This same apartment complex saw a 25% increase in its tax value between 2019 and 2021, which is sure to cause rents to go even higher.

Other examples across town show very similar figures, such as Pinnacle Place on Tobacco Road, which saw its property taxes go from $44,944 in 2019 to $84,000 in 2020 during the pandemic.  The taxes went up again in 2021 to $99,386. The arena would add another $7,500 to that bill, or another 8%. That 8% increase will get passed along to the 120 families that live there. Rents at Pinnacle Place average $844 per month. While I can’t say this for certain, it is my belief that someone living on a fixed-income paying rent of $844 per month who gets a rent increase letter is not going to be buying a ticket to a show at the new arena.

Augusta’s leadership is constantly griping about a lack of affordable housing and increasing rental rates, yet they continue to make bad policies that lead to rent increases. In five or 10 years, everyone will look back and regret the effect the arena had on the city budget and rent inflation.

Commercial properties pass through expenses to tenants. This means that every single dollar that goes from a business to their landlord as property tax reimbursement will affect that business’ bottom line.

Business owners are already feeling pressure from losses related to COVID-19 in 2020 and 2021. The strain on the labor market has also caused wages to inflate artificially, as has the talk of a nationwide increase to the minimum wage. Business owners do not have the cash to pay the additional property tax that will get passed through to them. If they are forced to, that is cash they can’t further invest into their business, meaning less money for raises, benefits and new employees.

Another major factor that has not been considered is the increase in property values. Typically viewed as a positive result of growth, property values can also hurt. The 30901 zip code has the lowest property values in the county. Injecting $250 million into a new building will raise property values downtown, thus adding even further to the property tax costs paid as a result of the arena. 

This number is impossible to predict because it will be lumped into the general budget. It is where the budget shortfall will be made up if the arena comes in over budget. We all know that government projects never come in over budget…

Once the bell is rung and the project voted for, the city is stuck with it. No matter what the budget overruns, lack of income produced by the arena or increased maintenance costs, the taxpayers will foot the bill.

Joe Edge is the Publisher for The Augusta Press. Reach him at [email protected].

12 COMMENTS

  1. THE CURRENT TERRIBLE inflation causing food, fuel, cost of living to rise is already a burden to renters….they don’t need increased rent because of a new arena when they are already facing increased rent due to inflation,

  2. EXCELLENT! Finally, someone puts it out there! Oh, and you can add a better mass transit program in the county which would improve the mobility of those needing transporation for work. VOTE NO on this proposal.

  3. Well done! This is the kind of mathematics and economic logic that the mayor, administrator, and most commissioners are either incapable of performing or unwilling to perform, as they have a personal interest in building the coliseum (e.g., bribes, kickbacks, income opportunities, or something vain, like naming rights). Another concern is that Augusta will build it and then not allocate the money and resources to maintain it, like The Riverwalk, Aquatic Center, Lake Olmstead and its stadium, most parks, and the existing infrastructure – roads, streetlights, storm water system, etc.

  4. Finally, someone in media who really understands what’s going on and how to explain it so everybody can understand it deserves a medal! Thank you, Joe Edge for this fine piece of work. Also, former Mayor Bob Young’s letter to the editor puts the arena project in financial perspective and raises questions that should have been answered before the SPLOST vote to spend $25 million on the project.

  5. Anyone who fails to see the incredible damage that this project will impose on the lower socioeconomic classes as well as anyone on a fixed income needs to reread this. NO is the only vote that can be cast by anyone with functional moral compass.

  6. Great article, Joe. I’ve been around a few years and have seen schemes like this fail all the time. I go back to everyone being responsible for themselves and that should include government. The fact that they are often inept is not a reason to simply have the taxpayers bail them out. Seems to me that if I went to my boss and told him I needed a raise because we need a new car, our rent just went up, etc., I would be laughed out of his office. Looks to me like everyone makes out here except for the property owners. If the property owners are shouldering 100% of the burden, why do they not receive some sort of ROI. Perhaps a share in whatever profits are generated and a reduction in their future property taxes. Oh, wait a minute, they really don’t expect this effort to show a profit, do they?

  7. I wouldn’t trust most of the county commission with ten cents of my money. Can’t keep streets clean, can’t get my water bill straight, can’t pick up My garbage, waste the money they have hiring stupid assistants, remodeling offices ( how does that help me?), going out of town for trips (how does that help them or me?), using credit and gas cards (take em back I say), make back door deals (how DID that fire chief get hired?) etc. wake up folks vote NO on JBC. Send them a message: we don’t trust you and leave our money alone!

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