CHICAGO – St. Louis Comptroller Darlene Green and owners of the city’s professional hockey team settled litigation, paving the way for a $78 million bond issue to finance arena renovations.
Green and Kiel Center Partners, which owns the National Hockey League’s St. Louis Blues, announced the settlement Friday. The pact ends litigation stemming from Green’s refusal to sign off on an up to $78 million bond financing to help fund improvements to the city-owned Scottrade Center. Green opposed the financing over concerns that it would damage the city’s credit ratings and team sued.
A St. Louis Circuit Court judge late last year ordered Green to sign the financing agreement approved by the city earlier in the year, ruling that the city charter did not allow her to withhold her signature. She signed it, but warned that she was considering an appeal of the order.
The settlement ends the prospect of an appeal. It allows the city to tap additional revenues to repay the debt. “This agreement is a positive outcome and in the best interest of city taxpayers,” Green said in a statement. “It is my hope it will mitigate impact on the city’s general fund and credit rating.”
Green said going forward her office is now focused on promoting a $50 million general obligation bond authorization in the New Year. Voters would need to approve the borrowing which would fund the “city’s capital needs,” Green said. It would not require a tax hike.
In first opposing the hockey financing, Green cited S&P Global Ratings’ commentary that the city already faced a high debt burden.
“This is a significant burden on our taxpayers, and that is why I called upon city leaders and the Kiel Center Partners to find another financing mechanism,” she said at the time.
Over the past two years Moody’s Investors Service and Fitch Ratings have lowered the city’s general obligation or issuer default ratings citing limited financial flexibility, a reserve shortage and high debt levels, she added. The city’s GOs and issuer default ratings are in the single-A category.
The St. Louis Board of Aldermen in February approved a financing agreement that calls for the Land Clearance for Redevelopment Authority of the City of St. Louis to issue $78 million of debt. It would provide $67 million for renovations at Scottrade Center. The other $11 million would fund reserves and cover issuance costs.
The financing plan relies on a series of revenue sources to repay the bonds including a 5% tax on ticket sales and $800,000 in revenue that will be freed in 2021 when bonds are retired for Kiel Opera House renovations. The plan also relies on general city revenue. With interest, the public subsidy totals more than $100 million.