(It’s Not Your Pothole Fund.)

This is Part 4 in a 12-part series on San Antonio’s Sports & Entertainment District, aka Project Marvel.

In order to understand how the new Spurs arena will be funded, take a little ride with me. Meet two characters heading to the future San Antonio Sports & Entertainment District (aka Project Marvel). They’re both going to a Spurs game, both ready to enjoy their evening. But the dollars they spend will ripple through our economy in two very different ways. Please meet Leo the Local and Tammy the Tourist.

Leo the Local

Leo lives on the South Side. He Ubers downtown, grabs a beer at the Friendly Spot, and then heads into the new arena. He buys another drink once he’s inside and cheers for Wemby until the final buzzer.

How much of Leo’s spending goes toward paying off the arena? Almost nothing.

His Friendly Spot tab? That sales tax goes to the state, not the arena.★

His Uber ride? Same deal.

The only thing that contributes is the beer he bought inside the stadium.

In other words, Leo’s daily life including his rent, his property taxes, and his paycheck remains untouched. He is not funding the arena with his household budget.

Tammy the Tourist

Now meet Tammy, a tourist flying in from Phoenix for a convention. She lands at the airport, rents a car, and checks into the Grand Hyatt. She grabs dinner at Ruth’s Chris, orders a margarita at the hotel bar, then heads over to the game.

Every step of her trip pours money into the arena’s funding streams. Her car rental triggers a county venue tax, which helps fund the arena. Her hotel stay generates local, county, and state hotel taxes, some of which get captured for the arena. Her steak and margarita at the hotel restaurant push mixed beverage and sales taxes into the PFZ. Her arena ticket and concessions add another layer.

The kicker? These are all existing taxes. Nothing new was created for her. The only difference is that instead of all of her dollars flowing off to Austin or into the general state pot, a portion gets redirected back into San Antonio to help pay for the arena.

That means Tammy, who does not live here, does not vote here, and does not worry about our potholes, is helping foot the bill for an arena that locals will actually use.

Pulling Back the Curtain

So how can Leo’s night out contribute almost nothing, while Tammy’s trip from Phoenix helps pay down the arena? Let’s pull back the curtain.

The city has all kinds of financing mechanisms it can use for big projects, but for the Spurs arena we only need to focus on a few: the PFZ (Project Finance Zone), a TIRZ (Tax Increment Reinvestment Zone), private investment, and the Spurs’ own dollars.

The most important one to understand is the PFZ. Think of it like this: the state allows San Antonio to capture the growth in hotel, sales, alcohol, and rental-car taxes within a three-mile radius of the project. In year one, that bump might be small because it’s measured against a baseline year. But each year, new growth stacks on top of the old growth.

It’s like a snowball rolling downhill: it starts small, but as more visitors check into hotels, eat at restaurants, and order margaritas at hotel bars, it keeps picking up more and more. Over time, the revenue mushrooms into something much larger.

Without the PFZ, all that extra growth in state hotel, liquor, and sales taxes would flow to Austin. With it, San Antonio can reinvest those dollars right back into itself.

Development Beyond the Arena

Now let’s go back to Leo for a moment. Imagine he decides to move from the South Side into a new apartment complex built near the arena. When that building goes up, the property value in the area rises. Here’s the key point: the original property taxes on that land keep flowing into the city’s general fund, just like before. But the extra property taxes created by the new higher value, the increment, stay in the district through what’s called a TIRZ. Those extra dollars get reinvested right back into the neighborhood for improvements like streets, sidewalks, and lighting.

Important to note: this does not mean Leo’s rent automatically goes up because of Project Marvel. A TIRZ does not set housing prices, it only redirects the extra property tax revenue from new development. The Spurs do not unlock any money inside the TIRZ unless they deliver on new private development, including housing, retail, hotels, and offices. That is part of their $500 million commitment to build around the arena, which generates the revenue for the city’s arena bond.

Separate from that $500 million in surrounding development, the Spurs have also committed $500 million for the arena itself. On top of that, they have agreed to cover any cost overruns. That is a total of $1 billion in upfront commitments. And that is just the start — under the deal, the Spurs are also required to deliver another $900 million in private development over the next 12 years, plus $75 million in community benefits.

Clearing Up the Misconceptions

Because the financing toolbox is complex, it is easy for myths to spread. The most common one is that this project is “stealing” money from city basics like potholes or police. That is simply not true.

Your CPS bill does not go to pay for it.

Your city property taxes are not redirected.

Your household budget is not touched.

Instead, the overwhelming share comes from visitors, business travelers, convention-goers, and out-of-towners like Tammy, through hotel stays, car rentals, and meals at downtown hotels. Locals only contribute if they choose to buy tickets or concessions at the arena, and that is voluntary entertainment spending, not a new tax.

Why This Matters

It is easy to frame these debates as “taxpayers vs. billionaires.” But the truth is, locals like Leo are not paying new taxes for the arena. Visitors like Tammy are. And the Spurs are putting in their own money too.

San Antonio has always used creative financing tools to build assets that serve both locals and visitors. The new arena is no different.

So when you hear the question, “Who’s paying for it?” the answer is simple:

Not you.

Not your pothole fund.

Not your property taxes.

It is visitors, conventions, and the Spurs themselves investing in a project meant to keep San Antonio competitive for decades to come.

Urban Nerd Appendix

(For the policy wonks and trolls among us — here’s the fine print.)

Sales Tax Breakdown (San Antonio):

• 1.000% City of San Antonio
  
• 0.125% Ready to Work Program
  
• 0.125% Pre-K 4 SA initiative
  
• 0.250% Advanced Transportation District (ATD)
  
• 0.500% Metropolitan Transit Authority (VIA)
  
• 6.250% State of Texas
  

Car Rentals:

Rental car taxes are part of the County venue tax, not the PFZ. That’s why Tammy’s car rental flows through Bexar County’s contribution to the arena, not the PFZ bucket.

PFZ Specifics:

PFZ revenue only comes from growth in state-level hotel, liquor, and sales taxes within the three-mile zone. Without the PFZ, those increments go to Austin. With it, San Antonio keeps them local.

Note: PFZ revenue applies only to hotels and hotel-owned bars or restaurants inside the zone. A stand-alone place like Friendly Spot does not qualify, which is why Lorenzo’s beer there does not help pay for the arena.

TIRZ in Project Marvel:

TIRZ revenues don’t go directly to the Spurs. They’re pledged to back a City-issued revenue bond for its share of the arena. The Spurs don’t unlock this revenue unless they deliver new private development (housing, retail, hotel, office). That development is part of the Spurs’ $500 million commitment to build around the arena.

Arena Cost Breakdown (approx.):

• $1.3B+ total cost
  
• $311M – Bexar County (venue tax, requires voter approval)
  
• $489M – City of San Antonio (funded through PFZ + TIRZ-backed bonds, no public vote required)
  
• $500M – Spurs (arena share, plus covering any overruns)
  

Voting Requirements:

• PFZ and TIRZ are already authorized by law and don’t require public ballots.
  
• The venue tax does require voter approval in Bexar County (on the November 2025 ballot).
  

Spurs’ Contribution (highlights):

• $500 million for the new arena itself.
  
• $500 million in surrounding development (Phase 1), which helps back the City’s arena bond through the TIRZ.
  
• $900 million in additional development (Phase 2) required during the 12-year buildout period.
  
• $75 million for community benefits, to be allocated by City Council.
  
• Agreement to cover all cost overruns so taxpayers aren’t left with the bill.

Total Spurs obligation: ≈ $1.975 billion over time.

Citations

Project scope and financing breakdown:
San Antonio Report – Decoding Spurs arena public funding

Spurs contribution and cost overruns:
San Antonio Express-News – Spurs commit $1B to arena, will cover overruns
San Antonio Express-News – Details of Spurs’ development pledge

Project Finance Zone (PFZ) mechanism:
San Antonio Report – How PFZs work in San Antonio

Arena cost and funding split (City/County/Spurs):
MySA – Arena cost estimates and public share

Venue tax and voter approval:
San Antonio Express-News – Bexar County venue tax heads to November ballot

Official city documents (term sheet):
City of San Antonio – Sports & Entertainment District Term Sheet (PDF)