DALLAS – El Paso, Texas will build a downtown minor league baseball stadium with $53 million of special revenue bonds after city officials withdrew a proposal to add another $10 million to the project’s cost.
The City Council authorized the City of El Paso Downtown Development Corp. to issue stadium debt with a par value of up to $52.8 million, which will include an approximately $38.2 million tranche of tax-exempt bonds and a $13.2 million taxable series.
Proceeds will provide $50 million for design and construction of the stadium, $1.8 million for issuing costs, and $1 million for public art as required by city ordinance.
Bonds for the stadium will be supported by a dedicated portion of El Paso’s hotel tax and stadium revenues. Pricing is tentatively scheduled for mid-June.
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.
The development corporation was formed in December 2012 to finance and oversee construction of the 9,000-seat stadium being built on the site of the former City Hall, which was razed in April to make room for the stadium.
A groundbreaking ceremony for the stadium is set for Thursday. The facility is to be operational by opening day in April 2014.
The special revenue bonds are rated AA-minus by Standard & Poor’s and A-plus by Fitch. 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.
City Manager Joyce Wilson withdrew the request for a $5 million contingency fee and $5 million for previously approved infrastructure projects in downtown before the council considered the higher total.
The street projects would be funded with proceeds from council-approved certificates of obligation as well as general obligation bonds approved by El Paso voters in November 2012, Wilson said.
“None of this was an increase in the cost of the stadium,” Wilson said. “We thought it would be prudent to have a 10% contingency fee because most of this project has not been bid.”
The contingency fee had been included in the request because it probably would be cheaper to issue the bonds now rather than later, Wilson said.
“We want to capture these low rates,” she said. “Interest rates have been extremely favorable.”
City Engineer Alan Shubert, who is overseeing the project, said the contingency fund was proposed to pay for amenities such as party suites and restaurants. The city signed a $40 million contract for construction of the stadium, he said, but some bids have been higher than expected.
Courtney Niland, a member of the city council, supported the motion to sell the bonds, but she blasted Wilson and Shubert for proposing the $10 million in additional costs.
“I’m going along because interest rates are extremely attractive,” Niland said. “But if you don’t deliver the stadium you promised at the price you promised, you will be fired.”
The city was authorized to issue up to $57 million of stadium bonds after winning a favorable ruling in a bond validation lawsuit decided in February.
The new ballpark will be the home of the relocated Class AAA Tucson Padres, acquired by a group of El Paso area investors in 2012. A contest is under way to rename the team before it moves to Texas.