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San Antonio Approves Spurs Arena Funding Source

The San Antonio City Council on Thursday approved the creation of a new Project Finance Zone (PFZ) to support plans for a proposed downtown NBA arena—intended as the future home of the San Antonio Spurs. However, questions remain about the broader financial framework for the estimated $1.5 billion project at Hemisfair.

New PFZ to Support Arena Development

The newly approved PFZ allows the city to capture a portion of state hotel-related tax revenues—such as hotel occupancy, sales, and mixed beverage taxes—generated within three miles of the project site. These revenues, collected over 30 years, would be reinvested into qualifying public projects.

The new zone replaces a PFZ established in December 2023, which was designed to fund improvements to the Henry B. González Convention Center and the Alamodome. By redefining the area as a “Convention Center Complex,” which now includes a proposed arena, the city gains more flexibility on project timelines.

The potential revenue generated from the PFZ will depend on the growth of tax collections over time. The base year revenue is locked in at the zone’s creation, with future increases earmarked for financing related projects. A prior estimate suggested the convention center PFZ could generate $2.5 billion over 30 years, though city officials expect a more conservative return for the new zone.

City finance officials emphasized that PFZ revenues will be distributed among several major projects, including the arena, and will increase gradually—limiting their use for early-stage debt payments on arena construction.

A Five-Pronged Funding Strategy

The PFZ is just one of five potential funding sources being considered for the project. The city, Bexar County, and the Spurs have signed a non-binding memorandum of understanding (MOU) committing to develop a funding plan by July. The plan aims to avoid using general fund dollars or non-TIRZ-related property taxes.

The five proposed sources are:

  1. PFZ: State hotel-related taxes redirected to local projects.

  2. Venue Tax: A Bexar County tax on hotel stays and car rentals, previously used to fund the Spurs’ current home, the Frost Bank Center.

  3. Spurs Contribution: Private investment from the team, currently valued at $3.84 billion by Forbes.

  4. TIRZ (Tax Increment Reinvestment Zone): A tool that reallocates rising property tax revenues from within a designated zone—Hemisfair, in this case—for reinvestment in the area.

  5. Team Revenues: Potential lease payments, ticket surcharges, and similar revenue streams.

City Manager Erik Walsh said he plans to present a more detailed funding breakdown to the City Council within the next month.

Spurs Favor Proven Public-Private Model

Despite the city’s complex approach, Spurs Managing Partner Peter J. Holt recently indicated the team prefers a traditional public-private model, similar to what was used for the Frost Bank Center.

“We are not looking to disrupt that model,” Holt said during a panel discussion, as reported by the San Antonio Report. “We are not looking to add a new tax to San Antonio citizens.”

Bexar County’s Cautious Stance

Bexar County officials have signaled that the Spurs may not be first in line for available venue tax revenue this time around. The county currently has up to $397 million in funding capacity at the existing tax rate, and up to $448 million if voters approve an increase.

However, County Judge Peter Sakai emphasized that other priorities—such as maintaining the Freeman Coliseum and developing East Side facilities—may take precedence. Any use of the venue tax would require voter approval.

Compressed Timeline Amid Political Transition

To get the venue tax proposal on the November ballot, Bexar County must submit its plan to the state comptroller by July 8. But Sakai said the county still needs key financial details—especially the projected cost of the arena—before moving forward.

“It’s up to the City of San Antonio and the San Antonio Spurs to fill in the blanks,” Sakai said.

Adding to the uncertainty, the city is currently in the midst of a runoff election for four council seats and the mayor’s office, with votes set for June 7. This political transition could delay key decisions and stall clarity on the arena’s path forward.

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