Somerset Ballpark Somerville, New Jersey Project Type: Other Case No: C030013 Year: 2000 SUMMARY Somerset Ballpark is a 6,500-seat baseball stadium developed as a public/private venture of Somerset County and the Somerset Patriots, an unaffiliated minor league team in the Atlantic League. FEATURES Public/private venture Brownfield/Superfund site Innovative financing Transit access Skyboxes Club restaurant Grandstand picnic seating Americans with Disabilities Act (ADA)–compliant design Somerset Ballpark Bridgewater Township, Somerset County, New Jersey Project Type: Special Use Volume 30 Number 13 July-September 2000 Case Number: C030013 PROJECT TYPE Somerset Ballpark is a 6,500-seat baseball stadium developed as a public/private venture of Somerset County and the Somerset Patriots, an unaffiliated minor league team in the Atlantic League. SPECIAL FEATURES Public/private venture Brownfield/Superfund site Innovative financing Transit access Skyboxes Club restaurant Grandstand picnic seating Americans with Disabilities Act (ADA)–compliant design DEVELOPER County of Somerset Somerset County Administration Building P. O. Box 3000 Somerville, New Jersey 08876-1262 908-231-7000 ARCHITECTS Design/Site Planning Clarke, Caton & Hintz Trenton, New Jersey 609-883-8383 Working Drawings/Specifications/Construction SSP Architectural Group Somerset, New Jersey 908-725-7957 CONSTRUCTION MANAGER Epic Management, Inc. Piscataway, New Jersey 732-752-6100 MARKET ANALYSIS Brailsford & Dunlavey Washington, D.C. 202-289-4455 TEAM OWNER/LESSEE Somerset Patriots Somerset Ballpark 1 Patriots Park Bridgewater, New Jersey 08807 908-252-0700 GENERAL DESCRIPTION Somerset Ballpark is an approximately 6,500-seat Minor League Stadium developed and owned by Somerset County, New Jersey, and leased to the Somerset Patriots, a team in the unaffiliated Atlantic League, which was formed in 1996 and began to play in 1998. It currently comprises eight franchise teams: Aberdeen Arsenal, Atlantic City Surf, Bridgeport Bluefish, Lehigh Valley Black Diamonds, Long Island Ducks, Nashua Pride, Newark Bears, and Somerset Patriots; a ninth team in Camden, New Jersey, is scheduled to join in 2001. The ballpark is designed to the stadium requirements set forth in the AA baseball franchise rules for professional baseball. A market analysis and the findings of the Somerset County Minor League Ballpark Advisory Task Force, which included residents, professionals, and business people, guided the county's decision to ensure that the impact of the facility would be "taxpayer neutral," at no time creating any additional tax burden. Supporters of the project felt that a minor league ballpark would be a significant enhancement of the quality of life in Somerset County. Since the general level of the game in the minor leagues is lower than in the majors, typical measures used to evaluate this type of sports venue are "How good are the hot dogs?," "How cold is the beer?," and "How good does the ballpark feel?" Because the primary target is the family market, the objective is to provide entertainment as much as, or more than, to promote the sport. While the ballpark has generated jobs and already appears to have had a positive economic impact, that was not the driving force behind the original idea. When the exploration of the feasibility of bringing minor league baseball to Somerset County began, there was no team standing in the wings waiting for a home. A business leader was approached as a possible franchise owner, and the project was structured as a public/private venture from the beginning. An interagency design team including Somerset County planners and engineers under the auspices of the county park commission and local architects, engineers, environmental experts, and sports consultants worked with the potential private sector lessee/team franchise owner. The ballpark is now in its first full season. The team went from being in last place when the park opened to finishing in fifth place, and it currently is in first place in the 2000 season standings. More than 2,700 season tickets were sold, and all of the skyboxes are leased. THE SITE The ballpark initially was planned to be located in Somerville, the county seat, but the landfill site that had been considered was unavailable. A Superfund site with excellent viability and access from Interstate 289 in Bridgewater Township on land previously owned by American Cyanamid and later by American Home Products (AHP) then was identified as a potential site. A portion of the site between East Main Street and the railroad tracks that divide the 400-acre township was considered suitable for a stadium if it could be reconfigured to create a site big enough for the ballpark and half of the parking, which would require the relocation of Main Street. The site thus created would still be inadequate for the almost 2,000 parking spaces that were required, so AHP agreed to design and build a parking lot south of the railroad tracks with a capacity of 991 vehicles. AHP licenses it for $1.00 per year to Somerset County, which transferred its use to the ballpark lessee. The site was conveyed free by AHP to Bridgewater Township, which in turn conveyed it to Somerset County at no cost; the entire 27-acre site thus was obtained at no cost, including the majority of the street improvements. However, road improvements to accommodate additional traffic were charged to the ballpark budget. The site is served by New Jersey Transit rail and Dash bus service; both services were improved to provide better service to the ballpark. Under a preexisting agreement with AHP, commuter parking for New Jersey Transit's Bridgewater station was located on a portion of what is now the north parking area. New Jersey Transit also was encouraged to rebuild the station so that its design complements the ballpark. BALLPARK LEASE AGREEMENT Financing Somerset Ballpark as a taxpayer-neutral project was critical; the project would lack both political and public support otherwise. An initial study suggested that the desired financing would require a creative leasing strategy and a cooperative effort between the county and the lessee to guarantee the necessary revenue stream. The lease therefore was negotiated first, establishing revenue guarantees as well as design criteria, minimum specifications, and a projected cost, which would be financed by the guaranteed revenues. The county was to receive preferential revenues compensation from a county ticket surcharge, gross parking fees, and naming rights revenues unless they were retained by the county and received directly. The county currently has the naming rights. In addition, the county was to receive percentage revenues compensation, defined as the excess of the percentage revenues for the operating year over the preferential revenues compensation received for the operating year. Under the initial lease, the percentage revenues compensation for an operating year is 30 percent of the gross revenues from the first $4.5 million, 7.5 percent of the next $2 million, and 2.5 percent of any amount over $6.5 million. As the design proceeded, the team franchise explored an option to add a stadium club, including a restaurant, resulting in a lease amendment to raise the base for percentage revenue from $4.5 million to $4.7 million and to give the county 7.5 percent of the next $2 million and 2.5 percent of any amount over $6.7 million. In exchange for this guaranteed revenue stream, the lessee has exclusive rights to all revenues including those from tickets, parking fees, concessions, advertising, and broadcasting. The only construction costs to the lessee were costs for the scoreboard, equipment for the concessions, a picnic area, and a public address system in excess of the $100,000 allowed for these purposes. Nonmonetary provisions gave the county exclusive rights to one skybox, with one also retained by the team owner/lessee. The county would have rights to ten days' use of the facility for county functions and could retain all revenue from such events but was obligated to pay all operating costs incurred by the lessee to support these events. To avoid political favoritism, the suite is made available via lottery to nonprofit organizations that request its use for fundraisers. The lease was set at 25 years, with three potential extensions for a total of 55 years on the same terms, subject to negotiated changes. It is interesting to note that this lease was negotiated before the lessee had a team franchise, before site acquisition was finalized, and before a final design and a firm construction cost had been determined. Under the terms of the lease, the county was to build the stadium to AA baseball franchise specifications, at a cost of $17.2 million and in time for opening for the 1999 season. Because there was a delay in the opening in the first season, the initial lease term was extended for one year, with the team guaranteeing sufficient revenue to pay the bonded indebtedness and an additional $100,000 during the first short year. FINANCING With the lease in place, the county had to determine how to finance both the construction and long-term debt for the ballpark. Both New Jersey and Somerset County had financing requirements to ensure that the project would be taxpayer neutral. The county had neither an economic development authority nor a development corporation that might act as the developer. It was decided that the cost of the ballpark would be included in the county's capital budget as a general obligation debt. Because the stadium would be leased to a for-profit team, the bonds would be taxable. Somerset County is a relatively wealthy area that does not need to borrow for most short-term construction projects, using cash reserves instead. The county could have financed the ballpark's construction with cash, but doing so would not have satisfied the taxpayer-neutral objective.