Trial testimony concludes in Times Forum tax battle
But a decision on the facility's value won't be made until a judge reviews arguments from both sides.
By JEFF TESTERMAN
Published June 6, 2003
TAMPA - Testimony in the tax trial involving the St. Pete Times Forum ended Thursday, but a decision on what the hockey arena and concert venue is worth is weeks away.
After both sides rested their cases, Circuit Judge James M. Barton II ordered written final arguments to be submitted by Palace Sports & Entertainment on June 16 and by Hillsborough Property Appraiser Rob Turner on June 23.
Barton said he will issue his final judgment after considering both arguments.
At issue in the civil trial is the tax assessment of the 20,000-seat arena and home of the Tampa Bay Lightning hockey team. The facility was built for $158-million in taxpayer money in 1996.
Though it is owned by the public Tampa Sports Authority, a pass-through provision makes Palace Sports, the owner of the Lightning, responsible for any property taxes.
Turner put the assessment at $83.9-million to $120-million for the years 1999 to 2001.
Lightning officials say they were shocked by those numbers, and sued Turner over the assessments. The Lightning claims the assessment for the arena should have ranged from $20-million to $21-million in the three-year period.
Because of the difference in values set by the property appraiser and the Lightning, a $2.2-million tax bill is at stake when Barton rules.
The assessment discrepancies derive from differing appraisal methods used by the two sides. Palace Sports attorneys Rob Kelley and Scott McLaren have argued that Turner's office ignored sales and income approaches to value to arrive at its assessments.
Palace Sports bought the Lightning and the right to operate what was then named the Ice Palace for $100-million in the summer of 1999. But the buyers submitted a form to the IRS indicating the value for the hockey franchise was $61.14-million.
After deducting values for furniture, fixtures and adjacent land costs, the IRS form revealed the Lightning had determined the value of the arena it was buying to be less than $30-million.
Lightning officials also argued that the property appraiser ignored critical income data. Team officials say the arena's operating ledgers have been awash in red ink because of design flaws, functional obsolescence and huge cuts of ticket revenues that must be paid to top concert artists.
They compared the Times Forum with the more modern and efficient Palace at Auburn Hills (Michigan), which is also owned by Palace Sports and is the home of the Detroit Pistons basketball team. The Michigan arena has 179 luxury boxes to the Times Forum's 82 and has more than $6-million in parking revenue compared with $300,000 for the Lightning.
Yet the Times Forum had a tax assessment in 2001 more than double the current $48-million assessment of the Auburn Hills facility.
Will Shepherd, general counsel for the property appraiser, has argued that sales and income data for special purpose facilities like the Times Forum are notoriously unreliable. Thus, the property appraiser relied on a cost-to-reproduce method, with deductions for depreciation, to determine the arena's value.
The dynamics of sports team ownership and arena operation have not been lost on Judge Barton. In musings from the bench, Barton has noted that a sports owner frequently gets a bargain on an arena because the community will pay millions to build it to get the economic benefits and civic pride that local leaders say will come from the investment.
"It's like getting a Mercedes for the price of a Chevy," Barton remarked this week.
- Times researcher John Martin contributed to this report. Jeff Testerman can be reached at 226-3422 or by e-mail at testerman@sptimes.com
