While President Trump’s very public feud with the NFL grabs the headlines these days, the U.S. House inserted a provision in the tax reform bill introduced last week which would eliminate a State or local government’s ability to issue tax-exempt debt for the development of any professional sports facility. The House Staff prepared a summary of the bill, which includes an explanation of Section 3604, the provision relating to tax-exempt financing for professional stadiums.
The introduction of this bill has no doubt sent the lobbyists for the major leagues (NFL, NBA, MLB, NHL) scurrying, as construction costs for a single facility in those professional sports leagues can now exceed $1 billion. The reach of Section 3604 extends to ALL professional sports facilities, however, and would also function to eliminate tax-exempt funding assistance for minor league professional sports arenas and stadiums. The bill therefore holds the potential to remove a significant tool utilized by State and local governments – including those which are not in the “major league” sports game — to achieve their economic development goals.
This bill will likely be considered by the full House shortly, and the recently-released Senate version of the tax reform bill does not appear to include an analogous provision. Accordingly, the reconciliation process is worth monitoring.