R2008-123 2008-08-08RESOLUTION NO. R2008-123
RESOLUTION EXPRESSING THE CITY'S INTEREST IN PARTICIPATING IN A
PROPOSED SPORTS AND RECREATION COMPLEX IN PEARLAND, TEXAS AND
RESOLVING OTHER MATTERS RELATING THERETO
STATE OF TEXAS
COUNTY OF BRAZORIA §
CITY OF PEARLAND §
WHEREAS, USA Partners Sports Alliance ("UPSA") has proposed to the City Council
(the "City Council") of the City of Pearland, Texas (the "City") that the City develop aCity-
owned sports and recreation complex to be named as the George & Barbara Bush Sports
Complex (the "Project"), with UPSA serving as the manager of the Project pursuant to a multi-
year management agreement (the "Management Agreement") with the City;
WHEREAS, UPSA has made certain representations regarding the Project to the City,
including a projection of anticipated revenues of the Project and the necessity of the City's
participation in the Project in order to facilitate the financing thereof;
WHEREAS, UPSA has also represented to the City that revenues generated from residual
contracts with local hotels, (i.e. contracts with local hotels that provide such hotels will pay the
City or UPSA a portion of the payments received from hotel room rentals generated as a result of
the requirement by UPSA that participants at sporting and other events held at the Project rent
hotel rooms at such local hotels (the "Residual Contracts")), sales taxes generated from sales
occurring at the Project site and the sale of sponsorships as a result of the construction and
operation of the Project (collectively, the "Project Revenues") will collectively be sufficient on a
yearly basis to pay debt service on a series of taxable certificates of obligation proposed to be
issued by the City (the "Certificates of Obligation") in an amount not to exceed $18 million for
the construction of the Project;
WHEREAS, if the Certificates of Obligation were issued by the City, it is the City's
intent that debt service on such Certificates of Obligation be paid from Project Revenues;
provided, however, that such Certificates of Obligation would be secured by a pledge of the
City's ad valorem taxes and a limited subordinate pledge of certain City revenues;
WHEREAS, UPSA has requested that the City express its willingness to participate in the
Project, and the City Council desires to provide such an expression of interest subject to
presentation of an acceptable definitive financing structure and acceptable financing terms, the
fulfillment of certain conditions precedent to any financing of the Project and approval of all
related financing and legal documents by the City's legal counsel and financial consultants.
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PEARLAND,
TEXAS:
HOU:2833728.4
Section 1. Preamble. The facts and recitations contained in the preamble of this
Resolution are hereby found and declared to be true and correct.
Section 2. Description of Proposed Financing of the Project. UPSA has represented
to the City that the issuance of the Certificates of Obligation in an amount not to exceed $18
million will be sufficient to (i) construct the Project and (ii) pay certain costs of issuance of the
Certificates of Obligation and that upon construction of the Project, Project Revenues will be
sufficient on a yearly basis to make debt service payments on the Certificates of Obligation for a
term of no more than twenty (20) years.
Section 3. Cit Ex ression of Interest.
(i) By adoption of this Resolution, the City officially expresses its interest in the
proposed Project and its willingness to consider issuing the Certificates of Obligation to fund
construction of the Project, subject to the satisfactory fulfillment of the following conditions
precedent relating to the Project within 6 months from the date of this Resolution:
(a) execution of the Management Agreement relating to the Project between
UPSA and the City in a form acceptable to the City in its sole discretion;
(b) verification of estimated Project Revenues provided by UPSA to the City
and an independent analysis of the viability of the Project by an independent third-party
consultant retained by and acceptable to City in its sole discretion;
(c) verification by the City's financial consultants that the estimated Project
Revenues described in subsection (b) above, will be sufficient, on a yearly basis and at then
prevailing market rates of interest, to make debt service payments on the Certificates of
Obligation;
(d) original executed copies of Residual Contracts in an amount sufficient, as
determined by the City in its sole discretion, to generate that portion of verified estimated Project
Revenues attributable to the Residual Contracts;
(e) original executed copies of sponsorship agreements in a number sufficient,
as determined by the City in its sole discretion, to generate that portion of verified estimated
Project Revenues attributable to the such sponsorship agreements;
(f) the commitment of George H.W. Bush and Barbara Bush, or the legally
authorized representatives thereof, in a form acceptable to the City in its sole discretion, that
George H.W. Bush and Barbara Bush will allow the Project to be named "The George & Barbara
Bush Sports Complex" or otherwise bear their respective name or names in a form acceptable to
the City in its sole discretion; and
(g) the approval by the City, in its sole discretion, of the financing structure
and financing terms for the Project (including, but not limited to, final interest rates, principal
amounts, maturities, etc.) in connection with the issuance of the Certificates of Obligation.
HOU:2833728.4
(ii) Upon the fulfillment of the conditions precedent described in Section 3(i) hereof,
the City will give the proposed Project strong consideration and may at such time agree to the
City's participation in the Project, including, but not limited to, the issuance of the Certificates of
Obligation; provided, however, the City will be under no legal obligation to participate in the
Project or issue the Certificates of Obligation at such time and may in its sole discretion
determine not to do so.
(iii) City Council hereby authorizes the expenditure of funds reasonably necessary for
the City to assist UPSA to fulfill the conditions precedent listed in Section 3(i) hereof, including
without limitation the payment of consultants and advisors necessary for the City to evaluate the
fulfillment of such conditions precedent. It is anticipated that each of the City and UPSA shall
bear its own costs in connection with the fulfillment of the conditions precedent listed in Section
3(i) hereof. Other than as described in the first sentence of this Section 3(iii), and
notwithstanding any provision above that may be construed to the contrary, nothing in this
Resolution shall be construed as creating any financial obligation on the part of the City. Any
and all services or other support to be provided by the City shall be subject to the appropriation
of funds therefor by the City Council, either through the budget for the fiscal year in which such
services or support are to be provided or otherwise.
(iv) The City is required to comply with federal, state and local laws, regulations and
codes in connection with the construction of the Project, including particularly procurement laws
relating to the selection of a contractor to construct the Project. Nothing in this Resolution shall
be construed to obligate the City to select or use UPSA as a contractor or subcontractor in
connection with the construction of the Project.
Section 4. Authorization of Other Matters Relating Thereto. The City Manager and
other officers, employees and agents of the City are hereby authorized and directed to do any and
all things necessary or desirable to carry out this Resolution including, but not limited to,
directing the City's legal counsel, financial consultants and other consultants to review materials
provided by UPSA relating to the conditions precedent described in section 3(i) hereof and the
structure, financial terms and legal documentation for the proposed Project and the expenditure
of funds necessary.
Section 5. Public Meeting. It is officially found, determined and declared that the
meeting at which this Resolution is adopted was open to the public and public notice of the time
place and subject matter of the public business to be considered at such meeting, including this
Resolution, was given all as required by the Texas Government Code, Chapter 551, as amended.
[signature page follows)
3
HOU:2833728.4
PASSED AND APPROVED THIS 8`" day of August, 2008.
Mayor
City of Pearland, Texas
ATTEST:
y Se
ity of arland, exas
S-1
HOU:2833728.4
City ofPenrland,Teias
Park Bond Debt Service Comparison
Funds Needed To Cover Debt Service
S17,720,000 General Obligation Park Bonds. In idditlon to.General.Ohuigatinn.Park.Bondis.6h
Fiscal Year Series 2009 $4,200,000 S4,200,000 S8;400;000 l00%of 90%of 75%0 of •60%of :50%of
Ending Certificates of Series:2012 Series 2013 Total Revenues Reventes Revenues Revenues Revenues
9/30 Obligation Park Bonds Park Bonds Park Bonds Difference S1,683,122 .1,514,810 S 1,262;342 51,609,873 3841,561
'2009 $598,050 S0 *
2010. 1,641,100 1,043,050 " 640,072 640;072 640,072 640,072 640;072
2011 1,641;063 1,641;063 42,060 42,060 42,060 42,060 42,060
2012 1,639;000 S120,750 S120,750 1,518,250 104,872. (3,440) (255,9(19) 008,377) (676,689)
2013 1,630,913 241,500 S120,750 362,250 1,277,663i 405,460 237,147 (15,32i) (267;789). (436,102) .
2014 1;638,463 261,500 261,500 523;000 1,115,463 567,660 399,347 146;879 (105,589) (273;902)
'2015 1,639,650 320,350 325,350 645,700 993,950 689,172 520;860 268,392 15,923 (152,389)
2016 1,638,138. 325,750 325,403 .651,213 986,925 .696,197 527;885 275,417 22,948 (145,364)
2017 1,638;925 325,575 325;288 650,863 988,063 695,060 526,747 274,279 21,811 (146,502)
, 2018" 1,641;675 325,113 324,825 649,938 991,738 691,385. 523;072 270,604 18,136 (150,177)
2019 1,641,050 324;363 324,075 648,438 992,613 696,510 522,197 269;729 17,261 (151,052)
2020 1,642,050 328,325 328,033 656,363 .985,688 697,435 529,122 276,654 24,186 (144,127)
2021. 1,039,338 326,713 320,425 653,138 986,200 696,922 528,610 276;142 . 23,673 (144,639)
2022, . 1,637,913 324,813 324,525 649;338 988,575 694,547 526,235 273;767 21,298 (147,014)
2023 1,642,438 327;625 327,338 654,963 987,475 695,647 527,335 274,867 22,398 (145,914)
2024 1,642,238 324,863 324,575 649,438 902,800 690,322 52.2,010 269;542 17,073 (151,239)
2025 1,642,313 320,813 326,525 653,338 988,975 694.147 525;835 273;367 20,898 (147;414)
2026 1,642,325 328;188 327,900 656,088 986,238 696;885 528,572 276;104 23,636 (144,677)
2027 1,641;938 328;988 328,700 657,688 934,250 608,872 530,560 278,092 25;623. (142,689)
2028 1,640,813 324,213 323,925 648,138 992,675 690,447 522,135 269,667 17,198 (151,114),
2029 1,638;613 329;150 328,863 658,013 980,600 702,522 534,210 281,742 '29,273 (139,039p
2030 328,225 327,938 656;163 (65.6;163).
2031 320,125 326;438 •653,163 (653,163)
2032 324,650 324;363 649,0.13_ (649,013)
2033. 327,000. 3.26,7.13 '653;713 (653,713); "
2034 323,488 323,200 646,688 (646,688)
2035 319,400 319,113 638,5:13 (638,513) ,
2036 319,738 319,450 639,188 (639,188)
2037 324,213 323,925 648,138 (648,138)
2038 322,538 317,250 639,788 (639,788)
Total S33,407,000 S8,430,563 S8,182,450 516;613,013 S15,597,888
* Net debt service after Capitalized Interest.
'°' Reduction of revenue:begins:in2012.
ilsstiiiiptions:
Series.2009 Series 2012;and 2013 Estimated Revenues:
Taxable Certificates of Obligation'issue General Obligation Bond issues Sponsorships S860,000
Estimated Interest Rate:of 6.75% :Estimated Interest;Rates of 5,75%o Sales Tax• 67;122
Hotel,Residuals. 756,000,
Total: $1,633,122,
USA PARTNERS * SPORTS ALLIANCE
The George & Barbara Bush Sports
Complex
Pearland, Texas
Complex Sponsors Amount Term
Naming.Rights $200,000 per year /0.year contract
Turf licensing agreement 250,000 per year 10 year contract
Field Sponsorships 250,000 per year 3 year contract
Field Signage 120,000 per year 1 year. contract
Beverage Sponsorship 40,000 per year - 5 yearcontract
Total Complex Sponsors $860,000 per year
Additional Revenue Sources:
1) sales tax increase
2) hotel;bed tax
3) hotel residuals
4) general economic impact
230 Canal Boulevard,Suite 3•;Poole Vedra Beach,FL 32082
usapsa @runail.cam• Phone(904):543-7285•Mobile(904)910-5318•-v.v w usapsa.com
3 it
USA PARTNERS * SPORTS ALLIANCE ,
The George & Barbara Bush
Sports Complex
at Pearland,Texas
August 19,2008
Mr. Frank Ildebrando
First City Tower
1001 Fannin Street.
Suite 1200
Houston, TX 77002-6708
Re: George& Barbara Bush Sports Complex
Dear Frank,
It was nice to talk to you yesterday. Per our conversation, I am addressing the questions you
had pertaining to the revenue streams and projections on the proposed George and Barbara
Bush Sports Complex in.Pearland.
1. The estimate for the sales tax is confirmed
2. Hotel Bed tax revenues will not be 100%of this number because of hotel availability
in Pearland
3. We are very confident that the hotel residuals of$756,000.00 are.accurate.
4. No, other than the hotel bed tax numbers and the Sponsorship projections. (New
Sponsorship projection of$860,000.00)
5. Yes, the sponsorships are renewable. Some are multi-year and some are annual.
We are very confident that this project will help.Pearland become 'The Premier Youth Sports
Destination' site in the country. We are very excited to get started marketing this to our national
sponsors. Time is critical for us to begin preliminary design work and sponsorship sales..
230 Canal Boulevard,Suite 3 • Ponte Vedra Beach, FL 32082
P 904.543.7285 • www.usapsa.com
USA PARTNERS * SPORTS ALLIANCE
Please let me know if you need any further.information.
Regards,
Tim Dulin
(901)461 - 1909
230 Canal Boulevard,Suite 3 • Ponte Vedra Beach, FL'32082
P 904.543.7285 • www.usapsa.com
City of Pearland,Texas
Park Bond Debt Service Comparison
S17,720,000 General Obligation Park Bonds Coverage
Fiscal Year Series 2009 S4,200,000 $4,200,000 S8,400,000 Based On
Ending Certificates of Series 2012 Series 2013 Total Estimated
9l30 Obligation Park Bonds Park Bonds Park Bonds Difference Revenues
2009 $598,050 $0 *
2010 1,641,100 1,043,050 * 1.614
2011 1,641,063 1,641,063 1.026
2012 1,639,000 $120,750 $120,750 1,518,250 1.109
2013. 1,639 913 241,500 $120,750 362,250 1,277,663 1.317
2014 1,638,463 261,500 261,500 523,000 1,115,463 1.509
2015 1,639,650 320,350 325,350 645,700 993,950 1.693
2016 1,638,138 325,750 325,463 651,213 986,925 1.705
2017 1,638,925 325,575 325,288 650,863 988,063 1.703'
2018 1,641,675 325,113 324,825 649,938 991,738 1.697
2019 1,641,050 324,363 324,075 648,438 992,613 1.696
2020 L,642,050 328,325 328,038 656,363 985,688 1.708
2021 1,639,338 326,713 326,425. 653,138 986,200 1.707
2022 1,637,913 324,813 324,525 649,338 988,5,75 1.703
2023 1,642,438 327,625 327,338 654,963 987,475 1.704
2024 1,642,238 324,863 324,575 649,438 ' 992,800 1.695
2025 1,642,313 326,813 326,525 653,338 988,975 1.702
2026 1,642,325 .328,188 327,900 656,088 986,238 1.707
2027 1,641,938 328,988 328,700 657,688 984,250 1.710
2028. 1,640813 324,213 323,925 648,138 992,675 L696
2029 1,638,613 329,150 328,863 658,013 980,600 1.716
2030 328,225 327,938 656,163 (656,163)
2031 326,725 326,438 653,163 (653,163)
2032 324,650 324,363 649,013 (649,013)
2033 327,000 326,713. 653,713 (653,713)
2034 323,488 323,200 646,688 (646,688)
2035 319,400 319,113 638,513 (638,513)
2036 319,738 319,450 639,188 (639,188)
2037 324,213 323,925 648,138 (648,138)
2038 322,538 317,250 639,788 . (639,788)
Total S33,407,000 S8,430,563 S8,182,450: S16,613,013 S15,597,888
* Net debt service after Capitalized Interest.
Assumptions:
Series 2009
Taxable Certificates of Obligation issue
Estimated Interest Rate of 6.75%
Series 2012 and 2013
General Obligation Bond issues
Estimated.Interest Rates of 5.75%
Estimated Revenues:
Sponsorships $860,000
Sales Tax 67,122
Hotel Residuals 756,000
Total: $1,683,122
•
".Jones,Gregg" To <BEisen@ci.pearlandax.us>,<cmantel@ci.pearlan.bLus>,
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<GreggJones@andrewskurt "ldebrando;,Frank"<Frank.ildebrando@rbccm.corn>,
h.com> "O'Hara;Ryan"<Ryan OHara@rbccin.com•
cc "Witte,Rick <RickWitte andrewskurth.com>-
08/13/200811:58 AM @ .
•
bcc
Subject Pearland Sports Complextax:issues,
History;, This message has been forwarded:•
«Attachment (618595-1 08-13-2008 11-03-16 AM)'.PDF» Claire. and
Gentlemen:
I have looked at the attached schedules to identify revenues. that could
be used to support tax-exempt debt and other structuring issues that-
would maximize the amount of tax-exempt bonds that could be issued for
the proposed Pearland Sports Complex, and I -have the following:
observations:
1.. The revenues from the sale of-Naming Rights and other, sponsorships
will give rise to private business use and will b:e private payments if
received by the City or EDC, according to a private letter ruling issued
by the IRS. They should be pledged to taxable debt which can be either
obtained directly by the Developer or issued by the City or the EDC..
There is no tax advantage in having those payments. received by the City
or EDC, as was suggested by someone during our conference call last
month. In fact, it is preferable- from a tax standpoint for those •
revenues to be received and controlled entirely by the Developer, as was
done with the naming rights for Minute' Maid Park, which are.: completely
the property of the Astros and are not used, to pay or secure. any of the
bonds financing the Park.
2, Whether the sales revenues from the concessions, vending machines,
gate admissions and merchandise will also treated as private payments
will depend on the nature of the management contract between the
Developer and the City or EDC.. If the management contract is a
"qualified management. contract," within the meaning of Revenue. Procedure
97-13, then the sales revenues need not be treated as private payments
and may be used to pay or secure tax-exempt bonds issued by the City or
EDC. Generally, the determination of whether a •management contract is a
qualified management contract is based on the interplay between the term
Of the contract and the type of compensation received by the manager:
a.. For a 15-year contract, at least 953 of,. the,manag:er'.s compensation
must be fixed, which is defined as a stated. dollar amount .paid ;fora.
specified period of time-. The stated dollar amount may be; increased
periodically by reference to an external objective standard, e.g. the
Consumer Price Index.
b. For a 10-year contract, at least 80% of the compensation must be
fixed.
c. For a 5-year contract, at least 50% of the compensation must be.
fixed, and the City must have the right to cancel the contract without
penalty or cause at the end of 3 years.
The balance of the compensation may be based- on a pear-unit fee or e.
percentage of gross revenues or expenses but .not both, and' may not
result in sharing a.percentage of the net profits with the Developer..
•
I recall hearing the Developer say during our conference call that he
was looking for a 20-year management contract. If so, that would not be
a qualified management contract and would result in private. business use
of the entire complex by -the Developer, making any revenues received by
the City or the EDC from the project private payments. In that case the
City could issue taxable bonds to which these revenues would be pledged
and could "also issue tax-exempt bonds or COs payable from ad valorem
taxes to finance infrastructure or other project costs. This' was
essentially the. structure used by League City to finance .the Big League
Dreams project.
I know this is a lot to digest, so if any of you have questions after
reviewing the foregoing, please feel free to :email or call: me at the
number below. I look forward to working with you on this proje"ct..
Gregg H. Jones
Andrews Kurth LLP
713-220-4479
7.13-238-7133 (fax)
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•
fiitachment(618595-108-13-200911-03.1 G AM).PDF •