El Paso Downtown Baseball Stadium Facility Bond Project
Total Page:16
File Type:pdf, Size:1020Kb
North Carolina State University El Paso Downtown Baseball Stadium Facility Bond Project Walter William Cutts PRT 503: Advanced Fiscal Management in Parks, Recreation, Tourism & Sport Organizations Dr. Kimberly Bush December 1st 2013 TABLE OF CONTENTS El Paso Downtown Baseball Stadium Introduction……………………………………………….3 Funding……………………………………………………………………………………………4 Repayment Schedule………………………………………………………………………………5 Series 2013A Tax Exempt Bonds……………………………….5 Series 2013B Taxable Bonds……………………………………6 2 Stadium Introduction In an attempt to further economic development the city of El Paso, Texas has begun the construction of a minor league baseball stadium in downtown El Paso. City officials are constructing the stadium with high hopes of increased community pride, affordable local entertainment, new local business advertising, and increased tourism and business for the city.1 City officials believe the economic impact will greatly benefit El Paso. Bringing an affiliated baseball team to El Paso would act as a catalyst for revitalization, generate economic activity, and contribute to the quality of life within the city. With a proposed completion date of April 11, 2014 the new stadium will be home to the El Paso Chihuahuas of the Pacific Coast League, a minor league affiliate to the San Diego Padres. In September, 2012 El Paso Mayor John Cook announced that City Hall was facing demolition to make way for a brand new AAA baseball stadium.1 City Hall, whose appraised value was $13 million, was facing renovations of up to $30 million in cost, meanwhile alternative site price tags were steadily increasing. City officials came to the conclusion that the demolition of City Hall to make room for the stadium was the most economically beneficial decision for El Paso. In April 2013 El Paso demolished its City Hall to make way for the construction of its new down town baseball stadium. The completion of the stadium will make El Paso one of just thirty cities to host a AAA baseball team in the United States. The new facility was funded through the selling of the City of El Paso Downtown Development Corporation Special Revenue Bonds, Series 2013 A & B. $45.125 million Series 2013A tax exempt bonds were sold, primarily to four institutional investors, at a 5.48% interest rate while $15.66 million Series 2013B taxable bonds were sold at a 7.24% interest rate.2 Once the construction is completed, the Chihuahuas will be expected to play seventy one home baseball games per season.3 While not in use by the Chihuahuas, the stadium will be used for varying downtown events, providing extra sources of revenue. The city estimates that the new stadium will provide approximately $17.9 million per year in event-related revenue to the city. If this estimation holds true, the city will have ample funds for the repayment of the loan. The home opener is scheduled for April 11th 2013 against the Reno Aces. After a promising start in merchandise sales, the Chihuahuas are hoping to play in front of a sell-out crowd of 9,500.3 Sources: 1.. http://home.elpasotexas.gov/_documents/FACT_SHEET-Ballpark.pdf 2 .. home.elpasotexas.gov/ballpark/documents/Memo_on_pricing_of_ballpark_bond_issues.pdf 3..http://www.milb.com/news/article.jsp?ymd=20130820&content_id=62237440&fext=.jsp&vkey=news_t4904&si d=t4904 3 Funding The new downtown baseball stadium will be 100% funded through the sale of El Paso city bonds. Through the selling of Series 2013A tax exempt bonds, El Paso was able to raise 45,125,000 dollars.4 Of the 45.1 million, 17.4 million is callable on August 15, 2017 or any date thereafter. Another 22.5 million is callable on August 15, 2023 or after.5 The purpose of the double call is to allow flexibility to restructure and repay the loan in the future. These tax exempt bonds are financed at 5.48%. Following the sale of Series 2013A bonds, Series 2013B taxable bonds were issued to raise 15,660,000 dollars.4 The taxable bonds are financed for 30 years at 7.24%. By keeping the taxable bonds issued significantly lower than tax exempt bonds, the city is able to capitalize on less taxable debt than originally projected. Sources: Series 2013A Series 2013B Total Par Amount $45,125,000 $15,660,000 $60,785,000 Premium: $4,270,568.90 $18,322.20 $4,288,891.10 Total: $49,395,568.90 $15,678,322.20 $65,073,891.10 Uses: Tax-Exempt Taxable Total Ballpark Construction $48,152,910.29 $15,247,089.71 $63,400,000 Fund: Cost of Issuance: $927,963.31 $322,036.69 $1,250,000 Underwriter’s $314,652 $109,195.80 $423,848.48 Discount: Rounding: $42.62 - $42.62 Total: $49,395,568.90 $15,678,322.20 $65,073,891.10 Repayment of loans will come from a variety of sources including: hotel/motel occupancy tax, rental fees, ticket surcharge, and general fund revenues. The purpose of this repayment is to limit the direct impact on taxpayers. 72% of the project will be funded by a 2% increase in Hotel Occupancy Tax.6 Sources: 4… home.elpasotexas.gov/ballpark/documents/Memo_on_pricing_of_ballpark_bond_issues.pdf 5… home.elpasotexas.gov/ballpark/documents/Summary of Ballpark Financing.pdf 6…http://home.elpasotexas.gov/_documents/FACT_SHEET-Ballpark.pdf 4 Series 2013A Tax Exempt Bond Repayment Schedule Initial loan of $45,125,000 for 25 years at 5.48% yields annual payments of $3,357,476.52 Principle Interest Total Payment Principle Remaining $45,125,000 Year 1 $884,626.52 $2,472,850 $3,357,476.52 $44,240,373.48 2 $933,104.06 $2,424,372 $3,357,476.52 $43,307,269.42 3 $984,238.16 $2,373,238 $3,357,476.52 $42,323,031.26 4 $1,038,174.41 $2,319,302 $3,357,476.52 $41,284,856.85 5 $1,095,066.37 $2,262,410 $3,357,476.52 $40,189,790.48 6 $1,155,076.01 $2,202,401 $3,357,476.52 $39,034,714.48 7 $1,218,374.17 $2,139,102 $3,357,476.52 $37,816,340.31 8 $1,285,141.07 $2,072,335 $3,357,476.52 $36,531,199.23 9 $1,355,566.81 $2,001,910 $3,357,476.52 $35,175,632.42 10 $1,429,851.87 $1,927,625 $3,357,476.52 $33,745,780.56 11 $1,508,207.75 $1,849,269 $3,357,476.52 $32,237,572.81 12 $1,590,857.53 $1,766,619 $3,357,476.52 $30,646,715.28 13 $1,678,036.53 $1,679,440 $3,357,476.52 $28,968,678.75 14 $1,769,992.93 $1,587,484 $3,357,476.52 $27,198,685.82 15 $1,866,988.54 $1,490,488 $3,357,476.52 $25,331,697.28 16 $1,969,299.51 $1,388,177 $3,357,476.52 $23,362,397.77 17 $2,077,217.13 $1,280,259 $3,357,476.52 $21,285,180.64 18 $2,191,048.62 $1,166,428 $3,357,476.52 $19,094,132.02 19 $2,311,118.09 $1,046,358 $3,357,476.52 $16,783,013.93 20 $2,437,767.36 $919,709 $3,357,476.52 $14,345,246.57 21 $2,571,357.01 $786,120 $3,357,476.52 $11,773,889.56 22 $2,712,267.38 $645,209 $3,357,476.52 $9,061,622.18 23 $2,860,899.63 $496,577 $3,357,476.52 $6,200,722.55 24 $3,017,676.93 $339,800 $3,357,476.52 $3,183,045.62 25 $3,183,045.62 $174,431 $3,357,476.52 ($0.00) Total: $45,125,000.00 $38,811,913.09 $83,936,913.09 Sources: 7… http://home.elpasotexas.gov/ballpark/documents/Summary%20of%20Ballpark%20Financing.pdf 5 Series 2013B Taxable Bond Repayment Schedule Initial loan of $15,660,000 for 30 years at 7.24% yields annual payments of $1,292,544.04 Principle Interest Total Payment Principle Remaining $15,660,000 Year 1 $158,760.04 $1,133,784 $1,292,544.04 $15,501,239.96 2 $170,254.26 $1,122,290 $1,292,544.04 $15,330,985.70 3 $182,580.67 $1,109,963 $1,292,544.04 $15,148,405.03 4 $195,799.51 $1,096,745 $1,292,544.04 $14,952,605.52 5 $209,975.40 $1,082,569 $1,292,544.04 $14,742,630.12 6 $225,177.62 $1,067,366 $1,292,544.04 $14,517,452.51 7 $241,480.47 $1,051,064 $1,292,544.04 $14,275,972.03 8 $258,963.66 $1,033,580 $1,292,544.04 $14,017,008.37 9 $277,712.63 $1,014,831 $1,292,544.04 $13,739,295.74 10 $297,819.02 $994,725 $1,292,544.04 $13,441,476.72 11 $319,381.12 $973,163 $1,292,544.04 $13,122,095.59 12 $342,504.31 $950,040 $1,292,544.04 $12,779,591.28 13 $367,301.63 $925,242 $1,292,544.04 $12,412,289.65 14 $393,894.27 $898,650 $1,292,544.04 $12,018,395.39 15 $422,412.21 $870,132 $1,292,544.04 $11,595,983.18 16 $452,994.85 $839,549 $1,292,544.04 $11,142,988.32 17 $485,791.68 $806,752 $1,292,544.04 $10,657,196.64 18 $520,963.00 $771,581 $1,292,544.04 $10,136,233.64 19 $558,680.72 $733,863 $1,292,544.04 $9,577,552.92 20 $599,129.20 $693,415 $1,292,544.04 $8,978,423.72 21 $642,506.16 $650,038 $1,292,544.04 $8,335,917.56 22 $689,023.60 $603,520 $1,292,544.04 $7,646,893.95 23 $738,908.91 $553,635 $1,292,544.04 $6,907,985.04 24 $792,405.92 $500,138 $1,292,544.04 $6,115,579.12 25 $849,776.11 $442,768 $1,292,544.04 $5,265,803.01 26 $911,299.90 $381,244 $1,292,544.04 $4,354,503.12 27 $977,278.01 $315,266 $1,292,544.04 $3,377,225.11 28 $1,048,032.94 $244,511 $1,292,544.04 $2,329,192.17 29 $1,123,910.52 $168,634 $1,292,544.04 $1,205,281.64 30 $1,205,281.64 $87,262 $1,292,544.04 $0.00 Total: $15,660,000.00 $23,116,321.08 $38,776,321.08 Sources: 8… http://home.elpasotexas.gov/ballpark/documents/Summary%20of%20Ballpark%20Financing.pdf 6 .