DALLAS – El Paso, Texas, would issue $60.8 million of revenue bonds to build a downtown baseball stadium under a revised financial plan that doubles the facility’s rent.
Investors in the Class AAA minor league team set to occupy the 9,000-seat stadium in 2014 offered Thursday to extend the lease and pay an additional rent totaling $12.1 million over that span to support the 30-year revenue bonds.
Josh Hunt of MountainStar Sports Group proposed a five-year extension of the 25-year lease and non-relocation agreement with the city. The annual rent would be raised to $400,000 from $200,000 in the original agreement, with 10% increases every five years.
Instead of paying $17.3 million to the city over 25 years, Hunt said, the rent, parking fees, and ticket surcharges will total $29.4 million over 30 years.
“In the later years of the lease, you're talking about an annual rent in the $700,000-plus range," Hunt said.
The El Paso City Council in late May capped the 25-year bonds supported by the city’s hotel tax at $52.8 million after rejecting a proposal to add $10 million to the project’s cost.
Mayor John Cook put the revised lease and construction agreements on the June 18 council agenda.
Increasing the debt capacity to $60.8 million will allow the construction of a four-level, grass-field stadium with suites and other amenities, Cook said at Thursday’s news conference.
"I want to congratulate (MountainStar) for stepping up to the plate and finding a way that we could make this not just a Triple-A baseball stadium that would meet the requirements of Triple-A, but to go beyond that and make it a showcase," he said.
The revised agreement developed by Alan Shubert, the city engineer overseeing the stadium project, includes a maximum construction price of $52.2 million for the stadium, up from the original $40 million contract.
A $40 million stadium would be a good ballpark, Cook said, “but it would not be the ballpark we deserve.”
The new downtown stadium is under construction at the former site of El Paso City Hall and a science museum, which were razed in April.
The additional payments from the team will support $12.1 million of the revenue bonds. Revenue from an increase in the city’s hotel tax approved by voters in November 2012 will support $48.7 million of the stadium debt, said Carmen Arrieta-Canaleria, the city’s chief financial officer.
The city’s surcharge on tickets and parking fees will increase 10% in the final five years of the revised agreement, she said.
The revenue bonds will be issued by the City of El Paso Downtown Development Corp., which was formed by the council in December 2012 to finance and oversee the stadium project.
Underwriters for the special revenue bonds are Morgan Stanley & Co. LLC and Citi.
Fulbright & Jaworski LLC is bond counsel. First Southwest Co. is the city’s financial advisor.
El Paso’s $564.1 million of general obligation debt is rated AA by Fitch and Standard & Poor’s, and Aa2 by Moody’s Investors Service.
The 25-year special revenue bonds have been rated AA-minus by Standard & Poor’s and A-plus by Fitch.
The stadium is to be ready by the opening of the 2014 minor league season. MountainStar acquired the Tucson Padres franchise, which will move from Arizona next year.