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The car rental tax may outlast arena it supports
 

Editorial
Copyright 1996 Atlanta Journal-Constitution
Article date: November 8, 1996
 

Paying off the bonds for the Hawks' new arena takes priority over paying the team. That should reassure Atlanta and Fulton County taxpayers, though we can't say the same for the players.

We're not lawyers and therefore can't assess whether it's an ironclad guarantee, but the deal struck between local officials and Turner Broadcasting System execs does appear to protect residents from being stuck with the $141 million bill for building the
birds' new roost. But then, it's not the arena part of the $213.25 million project that has touched off concern. Instead, it's the $72.5 million that will go for improving the area around the arena. The site plan calls for buying adjacent land and constructing
plazas, pedestrian corridors and parking garages. Though TBS will help pay for the projects, the lion's share of the work will be paid for by $62.5 million in bonds that will be backed by a 3 percent car rental sales tax.

The car rental tax is expected to generate about $6.5 million annually. The arena-related debt could be paid off in less than 20 years. The tax, however, will run until 2038. That's 42 years ---22 years longer than necessary. The windfall would be well over $300 million, accounting for inflation. And the law establishing the tax is so broadly worded that local governments have few restrictions limiting how proceeds can be spent.

It's easy to shrug off taking more than you need, especially when the tax comes out of somebody's else's pocket. City officials say that 80 percent of the tax will be paid for by out-of-towners, though car-rental experts say that between a third and a half
of the cars rented around town are to residents. We don't expect public officials to back away from the deal because of this, but next time they should be upfront about financing. If the arena is a good investment for the city and county --- and we think it is ---then taxpayers should have asked to approve it. This deal has been in the works for two years. There was ample time to put it to a vote. Fact is, city officials didn't want to. They would never have gotten away with passing a tax that will run far longer than is needed to retire the debt.

Turner people say they will sell the right to name the new arena. It would be fitting, perhaps, if City Hall were to spend some of its windfall to name the place appropriately: Cash Cow Arena.

Editorials represent the position of The Atlanta Journal and are written by its editiorial board, whose members are Jim Wooten, Jeff Dickerson, Martha Ezzard, Peter Kent and Richard Matthews.
 

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