DALLAS — The El Paso, Texas, City Hall will be razed and replaced with a $50 million bond-financed, city-owned minor league baseball stadium under a plan being proposed as a public-private partnership to the City Council on Tuesday.
The council will consider a resolution giving city manager Joyce Wilson the authority to sign contracts with a group of investors.
MountainStar Sports Group LLC promised to bring in a AAA minor league baseball team that is affiliated with a Major League Baseball team if El Paso builds a 9,000-seat stadium downtown. City operations would move to other sites until a new City Hall can be bought or built.
El Paso would finance, build and own the stadium, which is expected to cost between $45 million and $55 million. MountainStar would operate it under a 25-year lease, with three optional five-year extensions. It is to be completed by April 2014. It will include 30 luxury suites and up to 500 club seats.
The initial stadium financial proposal calls for the use of $15 million of taxable bonds and $35 million of tax-exempt debt. Support for the stadium debt could include lease revenue from the annual $200,000 rent it receives on the stadium and an increase in the city’s hotel tax. Revenue would also be generated by a 10% surcharge on tickets.
The proposed 2% increase in the hotel room tax would bring the total levy to 17.5%, making it the highest in Texas. The total includes the state’s 6% tax, the city’s current 7% and El Paso County’s 2.5%.
The increase, which would generate $2.4 million a year, must be approved by voters.
The city would establish a municipal property corporation to issue the lease revenue bonds.
The stadium would be part of a proposed downtown district that could also include a soccer stadium and a sports and entertainment complex. Voters will go to the polls in November to decide on a $468 million general obligation referendum that includes $180 million for the complex.
El Paso’s GOs are rated AA by Standard & Poor’s and Fitch Ratings, and Aa2 by Moody’s Investors Service. The city has $600 million of outstanding GO debt.
The investors group, led by El Paso businessmen Woody Hunt and Paul Foster, said the stadium deal must be in place before they can purchase an existing franchise and move it to the west Texas city.
MountainStar vice president Joshua Hunt said a new downtown stadium is essential for bringing in a Class 3A team.
“We cannot bring a team to El Paso without having a state-of-the-art ballpark in place or a firm commitment to build one,” he said. “A Triple-A baseball team and a new ballpark would be a tremendous quality-of-life opportunity for the city, as well as a catalyst for downtown revitalization and a boost to economic development.”
The city’s current minor league team, the El Paso Diablos, is not affiliated with an MLB team. It competes in the independent American Association. The Diablos play in city-owned Cohen Stadium, but the stadium resolution includes a non-compete clause that does not allow the lease to be extended when it expires in 2016.