Innovation Village – Stadium Authorization Tuesday, September 18, 2007 PROPOSED BOARD ACTION As the next step in developing the previously approved Innovation Village project, the Administration requests that the Board of Trustees adopt a resolution: a) conceptually approving and authorizing the development of an on‐campus steel‐frame football stadium for the Boca Raton campus, with a maximum design and construction cost of $62,000,000 and a projected capacity of up to 30,000 seats; b) authorizing the President to commence formal negotiations with appropriate financial institutions and design and construction professionals, including issuing University Requests for Proposals or Qualifications, as appropriate, to secure the most financially feasible development plan; and c) authorizing the President to take such further actions as are necessary and appropriate to achieve these ends, subject to the Board of Trustees final approval of all financing and construction plans. BACKGROUND INFORMATION Throughout 2006 and 2007, the Administration has developed plans to implement the BOT’s directive to enhance the traditional campus environment on the Boca Raton campus. The ultimate goal is to provide physical and programmatic resources that will support FAU’s efforts to become recognized as a university of first choice. As part of these efforts, the University selected through a Request for Proposal process a development team led by KUD International to create and implement a plan for the Boca Raton campus that would include student residential housing facilities, retail space to serve the university community, and a venue for athletics and cultural events. The RFP required that all financing for the project must be private, with no recourse to University funds. These efforts produced an initial set of alternative options for the events venue. In November 2006, the Board directed the administration to develop a plan to construct an expandable, open air stadium with initial capacity of up to 30,000, and a convocation center with capacity of 10,000. This proposal implements the open air stadium portion of that directive. The KUD International development proposal included cross‐subsidization of the various components of Innovation Village. In discussing these proposals, concerns arose regarding the degree of control the University could retain over the various structures whose revenues were dedicated to the cross‐subsidization plan. To address these concerns, the University has commissioned two feasibility studies to assess independently the feasibility of (i) a phased build up of university housing, and (ii) a self‐ financed stadium. Funding from the two projects could be cross‐subsidized if the Board directs; however, the analysis assesses each independently of the other, to enable greater clarity of the stand‐alone feasibility of each component. IMPLEMENTATION PLAN/DATE The development of the stadium would commence immediately, with follow up meetings at the appropriate BOT committees anticipated for the fall of 2007 and spring of 2008, final approval by the BOT in spring of 2008 and by the Board of Governors in the spring or summer of 2008, construction commencing in the spring of 2009, and opening to occur in the fall of 2010. FISCAL IMPLICATIONS The resolution does not authorize the commitment of University funds for financing or construction at this time. The University anticipates incurring charges of approximately $100,000 over the next six (6) months to secure financing, design, and construction plans. The University will continue efforts to raise significant donations and sponsorships to support development costs and operations. All future fiscal implications for all phases of the project will be developed in detail under the auspices of the BOT’s Audit & Finance Committee. Supporting Documentation: C.H. Johnson Consulting Stadium Feasibility Analysis Dunlap & Assocs. Review Analysis C.H. Johnson Consulting Housing Feasibility Analysis Dunlap & Assocs. Review Analysis Proposed Project Schedule Proposed Resolution Presented by: David L. Kian, General Counsel Charles Johnson, C.H. Johnson Consulting J. Craig Dunlap, Dunlap & Associates Phone: (561) 297-3007 TABLE OF CONTENTS I. REPORT LETTER II. INTRODUCTION AND EXECUTIVE SUMMARY III. MARKET ANALYSIS IV. COMPARABLE STADIUM AND COMPARATIVE MARKET ANALYSIS V. FACILITY DEMAND AND FINANCIAL PROJECTION VI. APPENDICES A-1 SCENARIO DEBT SERVICE SUMMARY A-2 30,000 SEAT CONCRETE SCENARIO DEBT SERVICE A-3 30,000 SEAT STEEL SCENARIO DEBT SERVICE A-4 37,500 SEAT STEEL SCENARIO DEBT SERVICE A-5 45,000 SEAT STEEL SCENARIO DEBT SERVICE B INNOVATION VILLAGE RETAIL I. REPORT LETTER C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING September 11, 2007 Mr. David Kian Office of the General Counsel Florida Atlantic University Administration Building, Room 367 777 Glades Road Boca Raton, Florida 33431 Dear Mr. Kian: C.H. Johnson Consulting, Inc. (Johnson Consulting) has prepared a market and financial analysis for the development of a new football stadium for Florida Atlantic University (FAU). This report includes estimates of market potential, demand, and projected financial performance. The attached report explains the methods used to develop the estimates and discusses the results of the report. Johnson Consulting has no responsibility to update this report for events and circumstances occurring after the date of this report. The findings presented herein reflect analysis of primary and secondary sources of information. Johnson Consulting utilized sources deemed to be reliable, but cannot guarantee their accuracy. Moreover, estimates and analysis presented in this study are based on trends and assumptions, which usually result in differences between the projected results and actual results. And because events and circumstances frequently do not occur as expected, those differences may be material. We have enjoyed serving you on this engagement and look forward to providing you with continuing service. Sincerely yours, C.H. JOHNSON CONSULTING, INC. 6 East Monroe • 5th Floor • Chicago, Illinois 60603• Phone: 312.444.1031 • Fax 312.444.1125 www.chjc.com • [email protected] II. INTRODUCTION AND EXECUTIVE SUMMARY C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING INTRODUCTION C.H. Johnson Consulting (Johnson Consulting) is a nationally recognized authority on stadiums, arenas, and university development projects. The firm works nationally and internationally for universities, cities and counties, and private sector developers. Locally, Johnson Consulting has worked on projects in Palm Beach County as the County’s representative in reviewing developer proposals to construct a 400 room hotel in West Palm Beach (2004) and later in assessing the parking requirements for that convention center headquarters hotel (2006). Elsewhere in Florida and nationally, the firm recently completed work on a university football stadium and arena for Delaware State University in Dover, Delaware as well as work on a new football stadium for The Citadel in Charleston, SC, the University of Northern Iowa’s new McLeod Center, a 6,500 seat multi- purpose arena, and a new arena for California State University-Sacramento. Perhaps of even more import, in the last couple of years, Johnson Consulting delivered comprehensive market and financial analysis reports for the new football stadiums at Florida International University (2006) and University of Central Florida (2005). Johnson Consulting is one of the top sports consulting firms nationally, serving universities and municipalities. Johnson Consulting is submitting this report presenting a market and financial analysis for an on-campus football stadium at the Florida Atlantic University (FAU) on its main campus in Boca Raton, Palm Beach County, Florida. The football stadium will compliment the other developments proposed for the Boca Raton campus as part of the Innovation Village project, including additional student housing and a retail center. The Innovation Village would join the new Alumni Center and 600 bed teaching hospital projects currently underway on campus. The analysis includes estimates of demand for the on-campus football stadium as well as its projected operating financial performance. It should be noted that an original concept for the stadium was a domed venue for both football and basketball as well as other sports. At that time there was a planned financial linkage between housing and the proposed domed stadium because it was believed that resources from Innovation Village’s Housing were going to be needed to support the financial needs of the domed stadium. Since then, a stand alone football-only stadium has become FAU’s focus. As such, an analysis for housing has been prepared, but presented separately. As a result, the Board of Trustees and financial analysts can judge the stadium on a stand alone basis to determine if stadium revenues or if combined Innovation Village revenues need to be pledged to the project. Florida Atlantic University Section 2 Page 1 Football Stadium Analysis September 2007 C.H. J OHNSON C ONSULTING, I NC. EXPERTS IN CONVENTION, SPORT AND REAL ESTATE CONSULTING Objectives of the Study Johnson Consulting has undertaken a program of services designed to accomplish the following major objectives: To communicate the transaction structure, in order to isolate demand, revenue and expense factors pertinent to the Stadium project specifically, To provide an evaluation