SPECIAL MEETING OF THE RIVER CITY REGIONAL STADIUM FINANCING AUTHORITY JUNE 17, 2021 AGENDA Phil Serna, County of Sacramento, President Martha Guerrero, City of West Sacramento, Vice President Oscar Villegas, County of Yolo Patrick Kennedy, County of Sacramento Chris Ledesma, City of West Sacramento
12:00 PM Call to Order Pursuant to the Governor’s Executive Order N-29-20, members of the River City Regional Stadium Financing Authority and staff will participate in this meeting via a teleconference. To reduce the spread of COVID-19, members of the public are asked to watch the meeting broadcast live on Wave Cable Channel 20 and to submit comments in writing by 10:00AM on June 17, 2020.
To submit a comment in writing, please email [email protected] and write “Stadium Authority-Public Comment” in the subject line. In the body of the email, include the item number and/or title of the item as well as your comments. All comments received by 10:00 AM will be provided to the Authority Members; posted on the meeting agenda page of the City’s website: https://www.cityofwestsacramento.org/government/meetings-agendas/river-city- regional-stadium-financing-authority; and shall become part of the record of the meeting.
MINUTES 1. APPROVAL OF MINUTES OF THE JUNE 8, 2020 SPECIAL MEETING OF THE AUTHORITY. (ABBAS)
REPORTS 2. PRESENTATION OF THE TREASURER’S REPORT FOR CALENDAR YEAR 2020. (RAPER) Comment: This report provides information on the compliance provisions of the River City Stadium Financing Authority revenue bonds, which funded construction of Sutter Health ballpark, for calendar year 2020.
Recommendation: It is respectfully recommended that the Board receive and accept this report.
NEW BUSINESS 3. CONSIDERATION OF APPROVAL OF AUTHORITY AND MUNICIPAL ADMINISTRATIVE EXPENSE BUDGETS FOR FY 2021/22. (RAPER) Comment: The Stadium Lease Agreement provides for a Municipal Administrative Budget to be adopted annually to reimburse member agencies for costs incurred for compliance with the Financing Agreements, terms of Bonds, and Indenture. Approval of a 2021-22 budget will allow for these reimbursements.
Recommendation: It is respectfully requested that the River City Stadium Financing Authority Board: 1) approve an initial budget for Municipal Administration Expenses for FY 2021/22 while the parties continue to negotiate in good faith to agree on a final budget for FY 2021/22, and 2) direct the Treasurer to send bills to the River City Stadium Management (RCSM) as expenses are paid by the City of West Sacramento on behalf of the Authority.
4. COVID-19 UPDATE ON BALLPARK OPERATIONS, REVENUES, AND DEBT OBLIGATIONS. (RAPER) Comment: Under the Stadium Lease Agreement, the Sacramento River Cats Baseball Club, and River City Stadium Management aka “the River Cats” operate Sutter Health Park as sublessees and provide revenues to the River City Regional Stadium Financing Authority to make debt service on the outstanding bonds. This agenda item provides the opportunity for the River Cat’s representative to make an informational presentation to the Authority on the status of the stadium and business plan.
5. PRESENTATIONS BY THE PUBLIC ON MATTERS NOT ON THE AGENDA AND WITHIN THE JURISDICTION OF THE AUTHORITY.
ADJOURNMENT
I declare under penalty of perjury that the foregoing agenda for the June 17, 2021 meeting of the River City Regional Stadium Financing Authority was posted June 14, 2020 at 1110 West Capitol Avenue, West Sacramento, California; and at 700 H Street, Sacramento, California; and was available to the public. A copy of the agenda was provided to the Yolo County Board of Supervisors for local posting.
/s/Yashin Abbas Authority Secretary
If you need special assistance to participate in this meeting, please contact the City Clerk’s Office, (916) 617-4500. Notification of at least 48 hours prior to the meeting will assist staff in assuring that reasonable arrangements can be made to provide accessibility to the meeting. Assisted listening devices are available at this meeting. Agenda Item #1
RIVER CITY REGIONAL STADIUM FINANCING AUTHORITY June 8, 2020 Minutes
Pursuant to the Governor’s Executive Order N-29-20, members of the River City Regional Stadium Financing Authority and staff will participate in this meeting via a teleconference. To reduce the spread of COVID-19, members of the public are asked to watch the meeting Livestream (https://www.cityofwestsacramento.org/government/meetings-agendas/river-city-regional-stadium- financing-authority), or via Wave Cable Channel 20 and to submit comments in writing by 2:00 PM on June 8, 2020.
To submit a comment in writing, please email [email protected] and write “Stadium Authority-Public Comment” in the subject line. In the body of the email, include the item number and/or title of the item as well as your comments. All comments received by 2:00 PM will be provided to the Authority Members; posted on the meeting agenda page of the City’s website: https://www.cityofwestsacramento.org/government/meetings-agendas/river-city-regional-stadium- financing-authority. shall become part of the record of the meeting.
The special meeting was called to order at 4:01 PM. Board Member Villegas was absent. All other members were present. Chair Serna presided.
The Pledge of Allegiance was led by President Serna.
Entry No. 1 Approved the minutes of the May 30, 2019 special meeting of the River City Regional Stadium Financing Authority. (0206-11-03)
MOTION: Sandeen. SECOND: Kennedy. AYES: Cabaldon, Serna. ABSENT: Villegas.
ROLL CALL VOTE: SANDEEN: Aye. CABALDON: Aye. KENNEDY: Aye. SERNA: Aye.
Entry No. 2 Received and accepted the Treasurer’s Report for calendar year 2019.
Entry No. 3 Approved the budget for Municipal Administration Expenses for Fiscal Year 2020-21; and directed the Treasurer to send bills to River City Stadium Management as expenses are paid by the City of West Sacramento.
MOTION: Kennedy. SECOND: Cabaldon. AYES: Sandeen, Serna. ABSENT: Villegas.
ROLL CALL VOTE: CABALDON: Aye. KENNEDY: Aye. SANDEEN: Aye. SERNA: Aye.
Board Member Villegas joined the meeting at 4:23 PM.
Entry No. 4 Heard presentation by the River Cats on the impacts of COVID-19 and related public health orders on the baseball season, ballpark revenues, and upcoming debt obligations; and provided feedback related to impacts from COVID-19.
Entry No. 5 There were no presentations by the public on matters not on the agenda.
River City Regional Stadium Financing Authority Meeting Minutes June 8, 2020 Page 2
The meeting adjourned at 4:31 PM.
Yashin Abbas, Authority Secretary
Minutes approved as presented by a majority vote of the Authority Board on June 17, 2021.
Yashin Abbas, Authority Secretary
2 RIVER CITY REGIONAL STADIUM FINANCING AUTHORITY AGENDA REPORT MEETING DATE: June 17, 2021 ITEM #2
SUBJECT: TREASURER’S REPORT FOR CALENDAR YEAR 2020
INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY: [ ] Council [X] Staff Becky Robertson, Finance Manager Finance & Technology Department [ ] Other
ATTACHMENT [X] Yes [ ] No [X] Information [ ] Direction [ ] Action
OBJECTIVE The purpose of this report is to provide an information report on the “post issuance” compliance provisions associated with the revenue bonds issued by the River City Regional Stadium Financing Authority (Authority) to fund construction of the Sutter Health Park ballpark.
RECOMMENDED ACTION Staff respectfully recommends that the River City Regional Stadium Financing Authority receive and accept the Treasurer’s report for calendar year 2020.
BACKGROUND In 1999, the River City Regional Stadium Authority was formed as a joint powers agency for the purpose of assisting with the financing of the (Sutter Health) ballpark, and that year issued $39.99 million in taxable lease revenue bonds to construct the facility. The bonds were secured by an installment sale agreement with River City Land Holding Company (RCLH) which requires that RCLH makes lease payments to the Authority sufficient to cover debt service on the bonds. A substantial portion of stadium revenues flow to a “lock box” from which they are distributed on a 50/50 basis to the River City Stadium Management (RCSM) for operating expenses and to the bond trustee (BNY Mellon) for payment of debt service. Funds sent to the trustee are used first for bond service then to fund various reserves. Additional funds are then returned to the RCSM for stadium operations. The stadium is owned by the RCLH, a limited purpose corporation that is legally isolated from the RCSM via a chain of leases, with the RCSM as the ultimate lessee. This structure is intended to create protections that would preserve the Authority’s ability to foreclose on the stadium and grounds in the event of a bankruptcy. Under the stadium lease, the RCSM is obligated to make rental payments equal to the debt service on the revenue bonds. In addition, there are agreements that secure the River Cats team to the stadium, including non- relocation agreements, security agreements, pledge agreements and a deed of trust. There are several measures put in place to ensure that the Authority and the purchasers of the bonds are protected. For example, at the time the bonds were issued, bond insurance was purchased for the bonds, and this insurance protects the purchasers of the bonds, not the Authority. To protect the Authority, a number of reserve funds were established. In fact, multiple layers of required reserves are built into the stadium transaction in order to ensure that various sources of funds would be available in the case that RCSM is unable to make required debt service payments; including:
1. Revenue fund reserve: maintained equivalent to one year’s debt service obligations. 2. Supplemental reserve fund: a. Guaranteed Payment Reserve Account: funded at $100,000 per year up to $3 million maximum; and b. Attendance-Based Payment Reserve Account: funded up to $50,000 per year, with amounts varying depending upon attendance. The Authority receives an annual report from the Treasurer in order to determine that stadium operations are not in default and to allow for early intervention before reserves are exhausted. Treasurer’s Report 2020 June 17, 2021 Page 2
ANALYSIS This report is limited to comments on the status of the trustee funds which are required to be deposited in order to make debt service payments and to achieve other financial requirements of the Authority’s Taxable Revenue Bonds, Series 1999. The key financial requirement reported in the annual Treasurer’s Report is confirmation that annual debt service on the bonds has been made. Other financial requirements must also be met.
In addition to a bond reserve (surety) equal to one year’s maximum debt service, the Stadium Lease provides for several credit enhancements, including the following:
1. Stadium Revenues. Section 3.03(2) provides that 50 percent of the Stadium Revenues shall go from the Stadium Lockbox to the Trustee until certain balances in the Revenue Fund and the Supplemental Reserve Fund have been satisfied. On April 1, 2020, the Bank of New York Mellon Trust Company notified U.S. Bank (Lockbox) that the requirements of Section 3.03(2) have been satisfied (see below for specifics).
On March 19, 2021, the Independent Auditor, Moss Adams LLP completed the audit of the Stadium Revenues deposited in the Stadium Lockbox for the period ending December 30, 2020 and confirmed that revenues have been deposited into the Stadium Lockbox as required by the Stadium Lease. Attachment 1 provides a copy of the Report of Independent Auditors and Consolidated Financial Statements for River City Baseball Investments Group, LLC and Subsidiaries.
2. Revenue Fund. As of December 31, 2020, the balance in the Revenue Fund was $1,407,182. Substantially all of RCSM’s cash receipts are deposited in a lockbox which distributes the funds between the Stadium Revenue account and bank accounts available for general purposes. Until such time as the next two debt service payments have been accumulated in the Stadium Revenue account, fifty (50%) percent of the deposits to the lockbox are transferred to the Stadium Revenue account and the remaining fifty (50%) percent of the deposits are returned weekly to RCSM. After the next two debt service payments have been accumulated (and until a debt service payment is made, thereby reducing the account balance to one debt service payment), 100% of the deposits to the lockbox are returned weekly to RCSM.
On April 19, 2021, the City was notified by the trustee that as of April 15, 2021, the Revenue Fund was less than the Revenue Fund Requirement pursuant to Section 5.05 of the Trust Indenture. The definition of the Revenue Fund Requirement is “as of any date of calculation, an amount equal to the amount of principal and interest to become payable to the Bonds on the next succeeding two (2) interest payments.” Below is a breakdown:
Revenue Fund Requirement $ 3,596,351.00 Balance in the Revenue Fund $ 1,765,038.84 Shortfall $ 1,831,312.16
Additional information regarding the current shortfall in the Revenue Fund, potential impacts of that shortfall, and an update on current ballpark operations and impacts of the pandemic will be provided as a separate report.
3. Supplemental Reserve GPA (Guaranteed Payment Account) Fund. As of December 31, 2020, the balance was $2,984,112. The Guaranteed Payment account is required to be funded annually in the amount of $100,000 until the total balance in the Guaranteed Payment and Attendance-Based accounts, including accumulated interest earnings, equals $3,000,000. At the time $3,000,000 has been accumulated, the required annual funding of the Guaranteed Payment becomes the amount necessary, if any, to cause the sum of the accounts to remain at that amount. The Guaranteed Payment account is fully funded, and no additional funding is currently required.
4. Supplemental Reserve ABA (Attendance Based Account) Fund. As of December 31, 2020, the balance was about $187,724. The Attendance-Based account is funded from RCSM’s cash flows at the initial annual rate of $50,000 per year (zero if certain attendance levels are not achieved). Once the $3,000,000 minimum is accumulated in the Guaranteed Payment Account and the Attendance-Based Account, the annual Attendance-Based funding changes to a variable amount ranging from zero to $150,000 per year depending on actual paid attendance for Triple A baseball games played at RCSM’s facilities.
Treasurer’s Report 2020 June 17, 2021 Page 3
Coordination and Review Preparation of this report was coordinated with RCSM.
Budget/Cost Impact The City has established Fund 880 (River City Regional Stadium Financing Authority) where both revenues and expenses associated with management of the bond debt are recorded. The City is also responsible for monitoring the transfer of funds to and from the trustee account held with BNY Mellon.
ATTACHMENTS 1. Report of Independent Auditors and Consolidated Financial Statements 2. BNY Mellon Trustee Letter
Attachment 1
Attachment 2
April 19, 2021 [email protected] [email protected] [email protected] [email protected] River City Baseball Association, LLC Attn: Manager 400 BallPark Drive West Sacramento, CA 95691
River City Regional Stadium Financing Authority c/o City of West Sacramento Attn: City Clerk 2101 Stone Blvd, West Sacramento, CA 95693
RE: River City Regional Stadium Finance Authority, Taxable Lease Revenue Bonds, Series 1999 Revenue Fund Requirement
To Whom It May Concern,
This letter is to notify you that pursuant to Section 5.05 of the above referenced Trust Indenture, the Revenue Fund is less than the Revenue Fund Requirement as of April 15, 2021.
The definition of Revenue Fund Requirement is “as of any date of calculation, an amount equal to the amount of principal and interest to become payable on the Bonds on the next succeeding two (2) interest payment dates.” Below is the breakdown:
Revenue Fund Requirement $ 3,596,351.00 Balance in the Revenue Fund $ 1,765,038.84 Shortfall $ 1,831,312.16
Please feel free to contact me at (213) 630-6145 or email me at [email protected] if you have any questions or concerns regarding this matter. Thank you
Best regards,
John Kim Senior Analyst, Client Service Manager
RIVER CITY REGIONAL STADIUM FINANCING AUTHORITY AGENDA REPORT MEETING DATE: June 17, 2021 ITEM #3 SUBJECT: APPROVAL OF BUDGET FOR MUNICIPAL ADMINISTRATION EXPENSES FOR FISCAL YEAR 2021/22
INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY:
[ ] Council [X] Staff Becky Robertson, Finance Manager Finance & Technology Department [ ] Other
ATTACHMENT [X] Yes [ ] No [ ] Information [ ] Direction [X] Action
OBJECTIVE: The objective of this report to authorize a budget for the Fiscal Year 2021-22 administrative expenses.
RECOMMENDED ACTION Staff respectfully requests that the River City Regional Stadium Financing Authority Board (“Board”): 1. Approve an initial budget for Municipal Administrative Expenses (“MAE”) for Fiscal Year 2021/22 while parties continue to negotiate in good faith to agree on the final budget for MAE for the upcoming fiscal year; and 2. Direct the Treasurer to send bills to River City Stadium Management (“RCSM”) as expenses are paid by the Authority.
BACKGROUND In 1999, the Authority issued $39.99 million in taxable revenue bonds to fund construction of the Sutter Health ballpark. The Authority is responsible for meeting a number of legal and procedural requirements annually in servicing debt on the bonds. The City of West Sacramento incurs these costs on behalf of the Authority, subject to future reimbursement by River City Stadium Management (RCSM).
Section 4D (5) of the Joint Exercise of Powers Agreement creating the River City Regional Stadium Financing Authority provides that, “charges of the City to be made against the Authority for the services of the Secretary, Treasurer, Controller and Attorney of the Authority shall be subject to the approval of the Board, such approval to not be unreasonably withheld.” Since the Authority does not have a source of revenue to pay these charges, Section 3.03 (a)(4) of the Stadium Lease Agreement (Attachment 1) provides additional rental payments for this purpose. Under this section, the River City Companies shall pay, when due, all costs and expenses incurred by Yolo County, the City, Sacramento County, the Authority, and the Trustee in complying with the provisions of the Financing Agreements, compensation and reimbursable expenses due to the Trustee and the Custodian, all costs and expenses of counsel, auditors, engineers and accountants and all other ordinary reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or the Indenture. This component of Additional Rental Payments shall be referred to as “Municipal Administrative Expenses.”
The Stadium Lease Agreement also provides that the River City Companies and representatives of the Authority, Yolo County, the City, and Sacramento County shall meet each year and negotiate in good faith to establish a budget (which shall contain a reasonable allocation to contingencies) for amounts (excluding Trustee and Custodian fees) due as Municipal Administrative Expenses. The Municipal Administrative Expenses shall be billed to the River City Companies from time to time, as soon as practical after receipt of any bill or invoice by the party seeking payment, but in any event no later than ninety (90) days after such receipt. Amounts billed shall be paid by the River City Companies within sixty (60) days after receipt of a bill.
In the event that parties are unable to reach agreement on a budget for Municipal Administrative Expenses within sixty (60) days after the commencement of a particular fiscal year, the parties shall submit to binding arbitration to resolve the dispute, said arbitration to be conducted by the American Arbitration Association pursuant to its commercial arbitration rules. The obligation of the River City Companies to pay the Municipal Administration Expenses shall be limited to amounts actually set forth in the budgets (including contingencies) established as provided herein.
ANALYSIS Approval of Municipal Administrative Expense Budgets June 17, 2021 Page 2
Costs incurred in complying with the provisions of the Financing Agreements and with terms of the Bonds or the Indenture are due to what is known as “post compliance” obligations that are legally required by issuers of public debt, i.e., the revenue bonds issued in 1999 to finance construction of the ballpark. Those costs are as follows: 1) legal services provided on an as-needed basis by City of West Sacramento and Authority counsel (Kronick Moskovitz Tiedeman & Girard); County of Sacramento Counsel; bond counsel (Orrick); 2) trustee services provided by the Bank of New York Mellon; 3) annual continuing disclosure documents prepared by consultant Willdan Financial Services and 4) Secretary, Treasurer, and Controller staff costs associated with the administration of the JPA budget, financials, accounting/bookkeeping, and debt obligations.
Since June of 2020, Authority, City, and Sacramento County staff have held several meetings with the River Cats President, Jeff Savage, and bond counsel from Orrick to discuss and understand implications of the pandemic on the baseball season and Sutter Health Park operations, including the loss of revenues and their impact on the minimum balance requirements in the Revenue Fund, and the potential for the City and the County of Sacramento to be called on to backstop the stadium debt obligations. This team also met to consider options to fund the debt and/or refinance the outstanding obligations to reduce the impact on RCSM and to avoid impact to the City and the County of Sacramento. To further the effort of the potential issuance of refunding debt the County had brought in their Financial Advisor PFM to assist in any analysis; however, they were only brought into the discussion in two meetings. As such, significant legal expenses that were unforeseen (and not accounted for in the Board adopted MAE budget for FY 2020/21) at the time of the budget adoption last June have been incurred by both the City and the County. In January 2021, County staff requested a revision to the FY 2020/21 budget. To date no agreement to amend the FY2020/21 MAE budget has been agreed to.
The River City Companies, City of West Sacramento and County of Sacramento met in June to negotiate the FY 2021/22 MAE budget. The County of Sacramento proposed a budget of $81,677.02 to cover $30,977.02 in legal expenses incurred for bond counsel services and $700.00 in Financial Advisor Services in FY 2020/21 as a result of the pandemic and an estimate of $50,000.00 toward potential additional legal costs in FY 2021/22. The City of West Sacramento proposed a budget of $62,200 to cover trustee services, disclosure services, Authority Officer staff costs, unreimbursed legal costs of $20,000 in FY 2020/21, $21,000 for potential additional legal costs in FY 2021/22, and $5,000 in contingency budget as provided for in the Stadium Lease Agreement. Combined, the proposed MAE budgets proposed by the City and Sacramento County total $144,200 as shown in the below table.
PROPOSED City County Total Authority Officers $ 5,000.00 $ 5,000.00 FY 2021/22 Legal 25,000.00 50,000.00 75,000.00 FY 2020/21 unreimbursed legal 20,000.00 31,677.02 51,677.02 Trustee Costs 5,200.00 5,200.00 Disclosure Services 2,000.00 2,000.00 Contingency 5,000.00 5,000.00 Total Budget Request $ 62,200.00 $ 81,677.02 $ 143,877.02
River Cats President has agreed to a total budget of $72,200 to cover $30,000 for Sacramento County and $42,200 for City of West Sacramento, as provided in the table below:
AGREED TO BY RCSM City County Total Authority Officers $ 5,000.00 $ 5,000.00 FY 2021/22 Legal 25,000.00 30,000.00 55,000.00 FY 2020/21 unreimbursed legal - Trustee Costs 5,200.00 5,200.00 Disclosure Services 2,000.00 2,000.00 Contingency 5,000.00 5,000.00 Total Budget Request $ 42,200.00 $ 30,000.00 $ 72,200.00 Approval of Municipal Administrative Expense Budgets June 17, 2021 Page 3
The budget agreed to by RCSM is half of the total budget requested by the Authority, City, and County of Sacramento. The Stadium Lease Agreement allows for negotiations to continue for up to sixty (60) days into the fiscal year before requiring Arbitration to settle the dispute. The parties intend to continue to negotiate a budget for MAE expenses; however, given that the start of the fiscal year is approaching in the next two weeks and agreement has been reached on part of the proposed budget requests, staff is requesting Board approval of the portion of the budget that has been agreed to by RCSM while those negotiations continue. When agreement is reached by all parties on a budget that is satisfactory to the parties after accounting for negotiations on the County’s requests for reimbursement of legal services incurred in 2020-2021, as well as future legal costs projected for 2021-2022, , a special meeting of the Board will be called to allow for adoption of a budget amendment for MAE expenses for FY 2021/22.
This budget will cover the fiscal year beginning July 1, 2021 and ending June 30, 2022 as well as reimbursement for unforeseen prior year legal expenses due to the impacts of the COVID-19 pandemic on the baseball season, ballpark revenues and upcoming debt obligations, to the extent that capacity exists in the approved budget to cover those costs.
Coordination and Review Preparation of this report was coordinated with the County of Sacramento and RCSM.
Budget/Cost Impact Approval of the municipal administrative budget ensures that the RCSM compensates the Authority, City, and County of Sacramento for costs associated with managing post debt issuance requirements and complying with Financing Agreements, terms of the Bonds, and the Indenture.
ATTACHMENTS 1. Section 3.03 (a)(4) of Stadium Lease Attachment 1 Section 4 of Stadium Lease Page 1
STADIUM LEASE
among the
CITY OF WEST SACRAMENTO and COUNTY OF SACRAMENTO as sub-sublessors
and the
SBIG, LLC and RIVER CITY BASEBALL ASSOCIATION, LLC as sub-sublessees
DATED as of AUGUST 1, 1999
======
SECTION 4
(4) Amount of Additional Rental Payments. The River City Companies shall pay, when due, all costs and expenses incurred by Yolo County, the City, Sacramento County, the Authority and the Trustee in complying with the provisions of the Financing Agreements (to the extent not paid from amounts on deposit in the Delivery Costs Fund or the Project Fund), compensation and reimbursable expenses due to the Trustee and the Custodian, all costs and expenses of counsel, auditors, engineers and accountants and all other ordinary reasonable and necessary administrative costs of the Authority or charges required to be paid by it to comply with the terms of the Bonds or the Indenture (this component of Additional Rental Payments shall be referred to as “Municipal Administration Expenses”). The foregoing Municipal Administrative Expenses shall be billed to the River City Companies from time to time, as soon as practical after receipt of any bill or invoice by the party seeking payment of Municipal Administrative Expenses, but in any event no later than ninety (90) days after such receipt, together with a statement certifying that the amount billed has been incurred or paid by Yolo County, the City, Sacramento County, the Authority, Trustee or the Custodian for one or more of the items above described, or that such amount is then so payable for such items. Amounts so billed shall be paid by the River City Companies not later than the latest time as such amounts may be paid without penalty or, if no penalty is associated with a late payment of such amounts, within sixty (60) days after receipt of a bill by the River City Companies for such amounts.
Notwithstanding the foregoing, the River City Companies and representatives of the Authority, Yolo County, the City and Sacramento County shall meet each year and negotiate in good faith to establish a budget (which shall contain a reasonable allocation to contingencies) for amounts (excluding Trustee and Custodian fee) due as Municipal Administrative Expenses. In the event that parties are unable to reach agreement on a budget for Municipal Administrative Expenses within sixty (60) days after the commencement of a particular fiscal year, the parties shall submit to binding arbitration to resolve the dispute, said arbitration to be conducted by the American Arbitration Association pursuant to its commercial arbitration rules. The obligation of the River City Companies to pay the Municipal Administration Expenses shall be limited to amounts actually set forth in the budgets (including contingencies) established as provided herein.
RIVER CITY REGIONAL STADIUM FINANCING AUTHORITY AGENDA REPORT MEETING DATE: June 17, 2021 ITEM #4
SUBJECT: UPDATE ON BALLPARK OPERATIONS, REVENUES AND DEBT OBLIGATIONS
INITIATED OR REQUESTED BY: REPORT COORDINATED OR PREPARED BY: Roberta Raper, Treasurer [ ] Council [X] Staff Jeff Savage, President
[ ] Other
ATTACHMENT [X] Yes [ ] No [ ] Information [ ] Direction [X] Action
OBJECTIVE The purpose of this report is to provide an update of the impacts of COVID-19 and related public health orders on the baseball season, ballpark revenues, and upcoming debt obligations.
RECOMMENDED ACTION As this is an update, there is no recommended action. This report is intended to provide an update, allow for a conversation and to respond to specific questions and solicit feedback from the Board related to impacts from COVID-19.
BACKGROUND The Board was updated at the June 8, 2020 meeting and again in a memo dated September 23, 2020 on the COVID-19 impacts on the baseball season, ballpark revenues and upcoming debt obligations. Since that time, a team of finance and legal representatives from the City, County, bond counsel, and River Cats have continued to coordinate to understand and discuss status, issues, and possible options for covering the stadium debt obligations if the pandemic and related orders were to continue, to avoid default on the various agreements related to the stadium and debt, and to avoid default on the bonds themselves.
ANALYSIS The Baseball Season Since the last Board meeting near the beginning of the pandemic, the structure of Minor League Baseball has changed significantly, in that it no longer exists and the River Cats are now part of Major League Baseball (“MLB”) going forward. As a result of this change, forty teams across the country lost their affiliations. Many of those newly unaffiliated teams will now become summer league teams for college students hoping to get drafted, and other teams will simply cease to exist. As a result of the new structure, the River Cats were able to secure a ten-year agreement with the San Francisco Giants as their affiliate. Operationally, very little is expected to change; however, there are now more stringent guidelines in place related to facility standards, including the requirements to update the clubhouse by adding square footage for player common areas, add another indoor batting cage, and add female locker rooms to name a few.
The 2021 season recently began on May 20, 2021 with limited capacity crowds (MLB eliminated April games in order to reduce travel risks for players). Operating under the orange tier for outdoor sporting events, the ballpark was allowed to host fans up to 33% of stadium capacity or higher if all fans were vaccinated or tested. In order to maintain 6-foot distancing requirements, however, actual capacity was approximately 24%. The second homestand will begin June 17, two days after California lifts most COVID restrictions. The new guidelines will allow the River Cats to return to normal capacities and eliminate the previous distancing requirements. Masks will still be needed by those not fully vaccinated. Ballpark Update June 17, 2021 Page 2
With the recent June 15th announcement, the River Cats were able to open up the rest of the games for sale and have experienced renewed interest in group and hospitality sales, which had been severely hampered by capacity and distancing restrictions. Sponsorship sales have also picked up recently now that there is less uncertainty. While the sales cycle is still months behind, there is momentum. The remaining challenge appears to be staff related as many positions remain unfilled around the stadium and River Cats staff are trying desperately to fill them. Assuming there are no setbacks related to COVID and they are able to continue to bring on new staff, River Cats president anticipates that revenues will be sufficient to fill the stadium lockbox prior to the next bond payment in November. As of the end of May 2021, there was approximately $1.87 million of the required $3.524 million in the Revenue Fund and an additional deposit was made the first week of June, bringing the total on deposit to over $2.0 million.
Additionally, the River Cats are still awaiting word on lobbying efforts at both the federal and state level. They were successful in obtaining a second round Paycheck Protection Program (PPP) loan which Mr. Savage hopes will be fully forgiven now that the River Cats have begun employing more people.
The Debt Service Obligations In 1999, the River City Regional Stadium Authority issued $39.99 million in taxable lease revenue bonds to finance the construction of the baseball stadium now known as Sutter Health Park. The primary source of repayment of the bonds is the rental payments required to be made by the River City Companies (RCC) under the Stadium Lease with the City of West Sacramento and the County of Sacramento.
Stadium revenues are deposited weekly into a “lockbox” fund from which, at present, they are distributed on a 50/50 basis to RCC for operating expenses and to the bond trustee (BNY Mellon) for deposit into the Revenue Fund, which is used for the payment of bond debt service. Currently, the balance in the Revenue Fund is just over $2.0 million.
Another source of repayment of the bonds is the Supplemental Revenue Fund held by the bond trustee. The current balance between the Supplemental Reserve Fund and the Attendance Based Reserve is $3.17 million. If the balance in the Supplemental Reserve Fund falls below $3,000,000, RCC would be required to pay $100,000 per year into the Supplemental Reserve Fund (half on December 31 and half on June 30). If the average paid attendance for all Home Games in the season exceeds 9,000, then RCC would also be required to pay $50,000 on October 31.
If amounts in the Revenue Fund and the Supplemental Reserve Fund are insufficient to pay debt service on the bonds, the City of West Sacramento and the County of Sacramento are required to make up the deficiency in the proportion of 33 1/3% for the City of West Sacramento and 66 2/3% for Sacramento County.
Even if no stadium revenues were received this year, the amounts in the Revenue Fund and the Supplemental Reserve Fund would be adequate to pay the bond debt service that is due on November 1, 2021, in the amount of $2,690,675.50, and on May 1, 2022, in the amount of $833,472.25.
Coordination and Review Preparation of this report was coordinated with RCSM, City staff, County of Sacramento staff, and legal counsel from all parties, and the Ballpark update was provided by Jeff Savage, River Cats President.
Budget/Cost Impact As the Revenue Fund and the Supplemental Reserve funds have sufficient balances to fully fund the debt obligations for this fiscal year, there is no budget impact related to this report. Based on the full reopening anticipated mid-June, it is expected that the Revenue fund will be maintained at required levels going forward, and debt obligations will be paid without issue. An update on the status and balances of these funds will be provided at the next meeting, and in the annual Treasurer’s report for 2021 which is typically presented to the Board in April.
ATTACHMENT None