Oklahoma City plans to come to market with $825 million of bonds in May to finance the bulk of a new arena for the National Basketball Association's Thunder in a deal that will keep the team in the city through at least 2053.
The city on Tuesday is set to receive the team's $50 million contribution to the roughly $900 million stadium, Brent Bryant, assistant city manager of Oklahoma City, told The Bond Buyer last week at the Texas Public Finance Conference.
The team is watching the market and looking at the first two weeks of May to sell the bonds, said Bryant,
The city in March 2025
During a panel discussion at the conference, Bryant said the new stadium was critical to keeping the team, which won the NBA championship last year. As one of the smaller markets in the NBA, Oklahoma City would have a tough time attracting a new franchise if the Thunder left.
"We know that if we lost the team, we're not going to get one back, and so we had to take that approach to it," he said. "The mayor didn't want to be the mayor that lost the team, the city manager didn't want to be the city manager that lost the team."
The city was "very, very strategic" about crafting the development agreement, he said, which keeps the team in town for 25 years after they move to the arena in 2028. If they opt to leave, they're required to pay $1 billion penalty over time, he said. "We were very adamant about that."
The current city-owned, 18,000-seat Paycom Center, which opened in June 2002 and cost $87.7 million was paid for with cash — no debt — by a one-cent sales tax. It has been the Thunder's home since 2008.
The upcoming bond issue is backed by a sales tax extension.
Oklahoma City Mayor David Holt
The 71% voter approval rate "is unheard of, especially when you look at the fact that it's a $900 million arena," Bryant said.
The city has projected the tax will raise nearly $976.3 million during the six-year period based on annual growth of 1.79%. The city will also contribute $78 million in MAPS 4 funds on top of the team's $50 million payment.
Bryant said he's keeping a close eye on the performance of the revenue stream. "Now I'm worried about sales tax. Is it going to come? Going to continue to grow? Is it going to slow down? Have recessions?"
The city hopes to mitigate rising project costs by using a construction-manager risk delivery method, he said. "It's going really well. So far, the first bids came in under budget," he said. "So call me back in mid-September. I'll let you know if I'm sleeping good at night," he joked.
In addition to Goldman Sachs, the financing team's co-managers are Morgan Stanley and BOK Financial. Other members are PFM Financial Advisors and co-bond counsel Williams, Box, Forshee & Bullard and The Public Finance Law Group.
