CHICAGO – The Missouri House intends to restore a $12 million appropriation – recently stripped from the state's pending fiscal 2017 budget -- toward the state's share of debt service on bonds issued for the St. Louis Rams' stadium.
The House Budget Committee removed the $12 million appropriation last week in its version of the pending fiscal 2017 budget ahead of a May vote on the budget. The move contributed to concerns from some market participants over the strength of the political commitment to continue paying off bonds backed by appropriation after the Rams moved to Los Angeles at the end of last season.
The House's Republican leadership reversed course Wednesday. Leaders said their hesitancy over the appropriation stemmed from worries that Gov. Jay Nixon, a Democrat, would use the state funds for other purposes such as a new soccer stadium.
"However, we have now received assurances from both the governor and his staff that, if appropriated, the funds will be utilized only for the purposes of debt payment and maintenance for the dome," said state Rep. Tom Flanigan, chairman of the House Budget Committee.
Flanigan said restrictive language would be added to the bill.
"The governor has repeatedly said that Missouri pays its bills, and we are trusting that he will honor that commitment by utilizing these funds to pay the debt and maintenance on the Edward Jones Dome rather than try to work around the legislature to finance a new soccer stadium," Flanigan said.
Nixon raised the ire of some lawmakers last year by putting together a public financing package in an effort to keep the Rams in town with a $1 billion stadium proposal that allowed for new bonding without a vote by lawmakers or the public. Lawmakers were worried that the administration might attempt to do the same to help finance a Major League Soccer facility.
NFL owners in January approved the Los Angeles move sought by Rams owner Stan Kroenke.
The dome was built in 1995 to lure the Los Angeles Rams to St. Louis. It was financed with the help of $256 million of 30-year appropriation backed bonds issued by the St. Louis Regional Convention & Sport Complex Authority in 1991. The bonds are repaid under a complex agreement between the city, county, state, and commission with payments subject to an annual appropriation.
They pay a combined $20 million annually to cover debt service on remaining dome bonds and $4 million for maintenance. About $144 million remains outstanding.
"In this case, the bondholders are relying on the power of rating agency and market pressure to retain continued market access for the state, city and county as their key protection against non-appropriation, in our opinion," Randy Gerardes, senior analyst at Wells Fargo Securities LLC, said in a recent research piece on the stadium decision.
"The remedy for failure to appropriate by any party to the financing agreement is to terminate use of the project for convention and football purposes," the report said. "Of course, we note that this remedy is of little use now that the main tenant no longer occupies the facility."