BRADENTON, Fla. – Palm Beach County, Fla. is selling bonds for its second two-team ballpark in an effort to rejuvenate the baseball preseason on the state's east coast.
Up to $133 million of tax-exempt and taxable bonds will be issued next week to finance a $144 million, 6,400-seat spring training ballpark for Major League Baseball's Houston Astros and Washington Nationals.
The county-owned stadium project in the city of West Palm Beach will include a large public park component along with practice fields and training facilities for both teams. While the project is currently estimated at $144 million, the teams agreed to shoulder costs above the county's contribution.
The two-team project is seen as resuscitating spring training on the Atlantic side of the state, giving MLB viable pre-season competition on each coast, Commissioner of Baseball Rob Manfred said at a groundbreaking ceremony on Monday.
"One of the things we particularly like about spring training in Florida is that we have a west coast branch and an east coast branch," Manfred said at the event, which coincided with the general managers meeting in nearby Boca Raton. "This project was really critical to maintaining that east coast branch."
The teams plan to open the park in time for the 2017 spring training season.
The 30-year bond transaction is currently planned to be structured with about $65.4 million of taxable securities and $56.85 million of tax-exempt bonds.
Both the taxable and tax exempt components of the deal are expected to be composed of serial and term bonds, according to county debt manager Mark Braun.
Book-runner Goldman, Sachs & Co. plans to price the taxable bonds Tuesday, and will take tax-exempt orders on Wednesday. Co-managers are Citi, JPMorgan, and Morgan Stanley & Co.
The county's financial advisors are Public Financial Management Inc. and Spectrum Municipal Services.
Bond counsel is Locke Lord LLP, disclosure counsel is Squire Patton Boggs, and Mark E. Raymond is representing the underwriters.
A covenant to budget and appropriate non-ad valorem revenues secures the bonds, though the county intends to repay the debt with tourist taxes, $50 million from state sales taxes under Florida's professional sports franchise funding program, and lease payments from the teams.
The deal is rated Aa1 by Moody's Investors Service and AA-plus by Fitch Ratings and Standard & Poor's. All three rate the county's general obligation bonds triple-A.
Braun, who said underwriters expect that the gilt-edged county will have no difficulty selling the transaction, pointed out that it is a plain vanilla offering per the county's traditional financing structure.
"Between the fact that it's baseball and the quality of the credit, the intimation is there's plenty of [investor] interest," he said.
Analysts said that Palm Beach County's strong finances and economy factor into their ratings for the offering.
The county, whose residents are among the wealthiest in the state, has a tax base of $217.5 billion after growing by a compounded average rate of 5.5% over the past five years, according to Moody's analyst Gregory Lipitz.
Lipitz said the county's infrastructure traditionally is well funded, reducing demand for external funding of the capital program.
"We believe the county's debt position will remain affordable given favorable debt service repayment, limited borrowing plans, and the county's sizable and recovering tax base," he said.
Although employment growth faltered during the recession with losses in construction and real estate employment and the severe housing market correction, Moody's said economic indicators have shown a solid rebound in economic activity.
In July, the county's 5.6% unemployment rate equaled the U.S. rate, and was below the state's 5.7% jobless rate.
The county had an available fund balance of 23% of operating expenditures, or $235.1 million in 2014, which included capital projects and internal service funds, according to S&P.
"In our opinion, Palm Beach County's liquidity is very strong with total government available cash of 65.5% of total governmental fund expenditures and 8.1 times governmental debt service in 2014," said S&P analyst Ruth Ducret.
The new stadium, called the Ballpark of the Palm Beaches, is also expected to boost tourism in the popular south Florida a region where visitor numbers are booming.
"I think this is a win-win for the county and the teams as far as a place for them to have their fans to come and as far as the county welcoming tourism," Braun said. "This will allow us to be the only county with four teams for spring training."
Palm Beach County also owns Roger Dean Stadium in Jupiter, which was built in 1998 and is the spring home of the Miami Marlins and the St. Louis Cardinals.
The new ballpark for the Astros and Nationals is rising atop a long-abandoned landfill, and has already sparked interest in a similar yet larger project across the state.
Pinellas County recently received three proposals for the sale or lease of a 240-acre former landfill adjacent to Interstate 275 providing easy access north to Tampa and south to Sarasota.
The trash dump, known as Toytown after a mixed-use project that was once planned on the site, has drawn interest from a development group called SportsPark Partners LLC.
The group, which includes the Atlanta Braves, wants to build a $663 million complex that includes a new spring training facility as well as commercial enterprises such as medical complexes, corporate office complexes, hotels and retail.
Depending on the terms of the deal accepted by Pinellas County, SportsPark's proposal suggests that local and state public financing would be sought to back bonds for the MLB facility.
The Atlanta Braves, which currently play Grapefruit League spring training games in Kissimmee near Orlando, said they want to relocate to the Pinellas sports complex in time for the 2018 spring training season.
The Pinellas County Commission plans to review proposals for the Toytown site in coming months.