The City of Portland supports the Portland Timbers' proposal to expand its stadium by 4,000 seats, even though it calls for a tax exemption that would have the city forgo at least $2 million over the course of ten years.

The Portland City Council unanimously voted Wednesday to approve supporting the Timbers' proposed $50 million expansion, which Mayor Ted Wheeler called "as good a deal that any public jurisdiction within the United States has been able to put together with a private sector sports team."

Other cities have used taxpayer money to build and upgrade stadiums for professional sports teams, whereas the Timbers have lined up $50 million in private financing, Wheeler noted.

By approving Wheeler's resolution, the City Council set in motion a process that will have the council vote in May on whether to hire architects and planners to represent the city during design of the new stadium section. In June, the council will vote on specific terms for the expansion and the associated tax break, said Tom Rinehart, the city's chief administrative officer.

By voting to support the Timbers' expansion plan, the city council signaled it approved in concept a tax exemption that would waive all ticket taxes on the 4,000 new seats for 10 years. After that period, the Timbers will pay the city a tax on tickets it sells for those seats in perpetuity, Timbers President of Business Mike Golub said.

Commissioner Nick Fish, Wheeler and Golub all noted that the proposal asks the city to waive taxes on tickets that would not otherwise exist without the Timbers spending $50 million on an expansion.

"It seems reasonable to ask for an exemption on taxes that would not already be generated," Fish said.

The mayor also noted that Timbers will bare the brunt of the expansion costs.

"While there is no such thing as a free deal, there are always ancillary costs that will be borne by the city with any expansion, the vast, vast share of this proposal is covered by the private sector itself," Wheeler said.

Wheeler acknowledged at Wednesday's meeting that the thought of approving another expansion gave him sweaty palms at first. The mayor opposed the financing mechanism of the stadium back when it was proposed in 2011 because it had the city take on the majority of the risk, he said.

The bonds used to finance the stadium are backed by the city's general fund. If attendance at Portland sports events falls or something else causes the Spectator Venues and Visitor Activities fund to fall short of what's needed to make debt payments, the city would have to tap into the general fund to make those payments.

But Wheeler said several conversations with owner Merritt Paulson and Golub about how the established franchise exceeded "even their most optimistic of scenarios" and business plans, reassured him.

"I'm very supportive of this effort," Wheeler said.

The city has used funds from the Spectator Venues and Visitor Activities fund to finance the debt payments on Providence Park.

Much of that money, 75 to 80 percent, comes from taxes and fees from ticket sales and parking fees for Trail Blazers games, concerts and other events at the Rose Quarter, said Susan Hartnett, Portland's spectator facilities and development manager.

If the Blazers choose to leave Portland when their contract is up in 2025, the city will have a "very challenging situation for which the general fund would be responsible for paying off the Providence debt," Commissioner Amanda Fritz said.

After throwing on her Rose City Riveters scarf, Fritz asked for a "safeguard" in the proposed expansion that would ensure the city does not lose out on ticket taxes if Portland Thorns fans choose to move to the new seats to avoid paying the ticket taxes they currently pay.

Timbers seats are likely to get filled regardless of ticket taxes because the team has a 13,000-person waitlist to purchase season tickets.

"I'm hoping I know that our team from the Office of Management and Finance will be negotiating a good deal for everybody," Fritz said.

Portland Commissioner Chloe Eudaly also said she plans to further explore the additional liability the city will assume with the proposed expansion.

"I certainly wasn't wanting to look a gift horse in the mouth, I just feel it is my responsibility to understand what kind of liability that we're agreeing to even though we're not outlaying cash up front," Eudaly said.

--Jessica Floum

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