DALLAS - The Harris County Sports Authority hopes the market today will cheer the sale of up to $484 million of revenue bonds to finance a new football stadium for the Houston Texans, a National Football League expansion team owned by local businessman Robert McNair.
UBS PainWebber Inc. is the lead manager for the deal, which includes co-managers J.P. Morgan Securities Inc., Salomon Smith Barney Inc., A.G. Edwards & Sons Inc., Bear Stearns & Co., Dain Rauscher Inc., Goldman Sachs & Co., Siebert Brandford Shank & Co., Apex Pryor Securities, and Ramirez & Co.
The sale will bring to fruition a plan conceived by community leaders in the mid-1990s and approved by the Texas Legislature in 1997: to establish an authority to build a new football stadium and a new baseball park to replace the city's 30-year-old Astrodome. The baseball facility, Enron Field, was opened last year.
The primary thrust of the deal includes about $260 million of senior revenue bonds, Series 2001A, and about $91 million of junior revenue bonds, Series 2001B. Also included are about $46 million of Series 2001C special revenue bonds and about $10 million of Series 2001D special revenue bonds to pay for costs associated with events hosted by the Houston Livestock Show and Rodeo, one of the facility's main tenants. Another issue of $50 million of Series 2001E special revenue bonds would pay for projects needed for the Houston Texans.
"The bonds being sold this week will pay for construction of Reliant Stadium," said sports authority controller Sue Millican. "We've earmarked $417 million for actual construction costs, with the remainder of the money being spent for such things as bond issuance costs and capitalized interest. Depending on the market, we may sell fewer bonds -- $484 million is as high as we'd go."
A 5% hotel tax and a 2% car rental tax currently levied by the authority will back the bonds, along with rent payments from the team and the rodeo. Team owner McNair will also kick in $25 million toward the stadium.
"The deal gets complicated because there are so many components," Millican said. "But the football team will be picking up some of the tab for the project, because they will be paying rent to the authority for using the stadium."
The 69,500-seat stadium, which is under construction and nearly 30% complete in its downtown Houston site, will be open for the 2002 football season and will be host to the 2004 Super Bowl.
The authority, to meet schedules, borrowed about $50 million last year to begin construction of the project because no contracts had yet been signed with the Texans or the rodeo. Under the authority's 1997 charter, no bonds can be sold to back a project until contracts have been signed with prospective tenants.
The bonds will be insured by MBIA Insurance Corp.
Bond counsel for the deal are Fulbright & Jaworski and Wickliff & Hall. The authority's bond counsel is Andrews & Kurth and Lemond & Jones, while Winstead Sechrest & Minick represented the Texans. Vinson & Elkins and the Law Offices of Francisco G. Medina were bond counsel to the underwriters, and Bracewell & Patterson represented rodeo officials.
The bonds have received underlying ratings of Baa3 from Moody's Investors Service. A report from that agency cited the lease payments as being key to the deal's winning investment grade ratings. Standard & Poor's gave the deal's senior revenue bonds its BBB-plus marks, the junior revenue bonds its BBB rating, and the special revenue bonds a BBB-minus.
