DALLAS — The bond-financed baseball stadium under construction in downtown El Paso will cost $10 million more than expected in June and $20 million more than predicted when investors initially sought city help for the project.
El Paso Mayor Oscar Lesser and city officials will meet with investors in the minor-league team set to occupy the new stadium in 2014 to resolve the cost issue.
The $64 million allocated to the 9,000-seat stadium project "will not be sufficient to complete construction," said Joshua Hunt, a principal in MountainStar Sports Group.
"As a result, the city and MountainStar began discussing additional ways to cover these additional costs, which could be as much as $10 million," Hunt said in a Sept. 20 e-mail to Lesser.
The MountainStar investors bought the Tucson Padres of the AAA-level Pacific Coast League in 2012. The team is scheduled to begin the 2014 season at its new facility. El Paso has already demolished its city hall to make room for construction of the baseball stadium.
In his response to MountainStar, Lesser said the city would not be liable for the additional $10 million in stadium costs.
"I have asked that MountainStar provide a clear commitment to cover the additional expenditures, and I believe your proposal adds additional modifications that I cannot support," Lesser said in his reply.
"I am willing to consider a proposal whereby MountainStar will fund anything in excess of the 'not to exceed the $64 million' contractually committed to by the city," Lesser said.
The City of El Paso Downtown Development Corp. in August issued $60.8 million of revenue bonds backed by the city's hotel tax for its share in the stadium costs.
The stadium proposal was pitched as a $45 million to $55 million project when first proposed to the El Paso City Council in June 2012. Voters in November approved a 2% rate increase in the city's hotel tax to support the bonds.
The council rejected a request by MountainStar Sports in late May to raise the city's portion of the costs by $10 million.
The increase, to $60.8 million of revenue bonds, was approved in June after team investors agreed to increase their contributions by $12 million over a 30-year stadium lease.
The investors initially agreed to contribute $17.3 million in rent, parking, and other revenues over 25 years. The new agreement called for investor contributions of $29.4 million over 30 years.
When the stadium bonds did not sell in July as interest rates rose, the council agreed to increase the interest cap on the bonds.
The top rates were set at 6.5% from the original 5% cap set by the city on the $45.1 million of tax-exempt debt issued for the stadium, and to 7.25% from 5.75% for $15.7 million of taxable bonds.
The tax-exempt revenue bonds were priced to yield 5.95% at the sale. Underwriter Goldman Sachs purchased the 25-year taxable portion at 7.2%.
The development district's revenue bonds are rated A-plus by Fitch and AA-minus by Standard & Poor's.
Team investors recently renewed the lease on Kino Sports Complex in Tucson for another year in case the Texas ballpark is not completed on time.
"It is a just-in-case alternative in the event something unforeseen takes place with the construction schedule," said Alan Ledford, president of the investor group.