DALLAS -
The $53.05 million of variable rate demand tax revenue bonds is the second and last tranche from a $275 million authorization approved by the AZSTA board in 2003 to finance its share of the $450 million stadium's cost. AZSTA issued $221.95 million of revenue bonds in February 2003.
The stadium is scheduled to open in August 2006, in time for the beginning of the National Football League season.
The bonds will carry a variable rate to make them attractive to investors, said AZSTA finance director Charles Foley, and a fixed-rate swap agreement will hedge the authority's exposure if interest rates go up significantly.
"The swap arrangement is not complete protection, but it does provide coverage if rates go up," he said. "Since we're seeing historically low interest rates, it is a good assumption by investors that rates will probably go up. If they do, this provides us with some liquidity."
Foley said the arrangement also lowers the authority's cost of borrowing, as AZSTA expects to achieve a savings of 60 to 75 basis points through the swap.
"We've been working with our financial advisor and our board, and everybody is comfortable with the arrangement," he said.
RBC Dain Rauscher Inc. is the authority's financial adviser, as well as the underwriter for this issue. Squire, Sanders & Dempsey is bond counsel.
The Series 2005A bonds are backed by a 3.25% tax on car rentals in Maricopa County and a 1% hotel occupancy tax in the county. Other revenue sources include the state's share of the sales tax generated within the stadium and the Cardinals' annual rent that starts at $250,000 per year with increases of 2% each year.
However, Foley said the 2005 bonds would be supported mostly by a new revenue stream, the city of Glendale's portion of the sales tax from stadium activities.
"There was some disagreement over who would issue these completion bonds, and it was decided that we'd issue the bonds and receive the city's share of the sales tax from the stadium in return," Foley said.
The 2005 bonds will be used primarily for off-site improvements, Foley said, including parking lots, water and sewer lines, roads, and other infrastructure outside the stadium.
Ambac Assurance Corp. will insure the bonds, which have been rated A- by Fitch Ratings and A2 by Moody's Investors Service.
Moody's analyst Helen Cregger cited Maricopa County's strong and diverse economy as a key factor in the A2 rating.
Cardinals Stadium is set to host the first-ever national collegiate football championship game in January 2007, and the NFL's Super Bowl XLII in 2008. It will hold 63,000 fans for games, with the capability to add 10,000 seats for special events. The stadium will include a retractable portion of the roof that is the size of a football field, and a natural grass playing field, 234 feet by 400 feet, that can be rolled onto and off the stadium floor as required for various events.
