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HomeMy WebLinkAboutCounty memo - 2COUNTY MEMORANDUM TO: Honorable Alex Penelas Mayor, Miami -Dade County Hon. Chairperson Barbara Carey-Shuler, Ed.d and Members Board of County missioners, Miami -Dade FROM: George M. B County Ma Subject: Marlins Ballpark Date: Honorable Manuel A. Diaz Mayor, City of Miami Hon. Chairperson Arthur E Teele, Jr. and Member B rd of C)y Commissers, City of Mi Joe Arriola City Manager, City of Miami ``April 29, 2004 As Managers working towards the same goal and following the directives of our respective Mayors and Board Members, we are pleased to submit this preliminary term sheet and proposed financing plan for the construction and development of a new ballpark for the Florida Marlins. We recommend proceeding towards the development of a ballpark provided the preliminary term sheet conditions are addressed and ultimately accepted by the County, City and the Marlins. We recognize a joint memo such as this is not the typical manner information is provided to our governing bodies, however, for a project of this nature to be successful it is critical the County and City work hand -in -hand in public partnership throughout the course of this project. In response to .the Marlins' extended deadline of May 1, 2004to have a financing plan in place, this preliminary term sheet is intended to outline a proposal we believe is the most responsible and viable opportunity to build a ballpark. While further discussion regarding the details will be forthcoming, including your review and subsequent feedback, at this point we felt it best to provide our governing bodies, as well as the State, with a preliminary document that lays out the ingredients for a sound proposal for a new ballpark. The site recommended for the proposed ballpark is the Orange Bowl. This site is by far the best and most sensible site, which has several advantages. To name a few: SUBMITTED INTO THE PUBLIC RECORD FOR • Location - centrally positioned and only two miles from the downtown core, close to Airport and Civic Center • City owned land for vast majority of the site • Most cost effective and developable site • Right next to historic Orange Bowl already a major center for sports events; further compliments Orange Bowl renovation plans • Will reinforce existing and new development in this dynamic area; including the revitalization of the Miami River corridor • Provides enough land for new structured parking as well as surface parking • Enhanced opportunities for development of year-round attractions and other business developments This site proposal differs from the City's original Orange Bowl proposal in that the ballpark will not be directly integrated into the Orange Bowl Stadium. The Marlins have reviewed the site positioning and have indicated the site meets the basic requirements of their program. The Marlins have expressed their enthusiasm about this site opportunity and the general terms and funding ideas we discussed with them. Please be advised, we have fully communicated to the Marlins that all components of this preliminary term sheet and financing plan will require final approval by both governing bodies. As you will see, all parties are being asked to step up and increase their respective commitments and contributions to the project. We have made every effort to find a funding balance that protects the public interest and also enables the Marlins to stay competitive. The financing plan reflects an allocation among the Marlins, County and City of the estimated construction cost of the ballpark and associated infrastructure costs, and the Marlins remain responsible for any and all cost overruns. A portion of the increased Convention Development Tax contribution is contingent upon the sale of the Miami Arena. The City will contribute to the cost of the ballpark through a Tourist DevelopmentTax financing and by financing a 2,500 space parking garage at the Orange Bowl site that the Marlins will develop and operate. The City is also responsible for land acquisition and site -related infrastructure costs. As previously stated, it is clearly understood final approvals by both Boards are required to proceed with any respective increased contribution. We anticipate City Commission consideration on May 6 and County Commission consideration as early as May 11. The Marlins will also be required to increase their contribution by way of an upfront equity payment and a rent payment tied to a Tong -term lease. The County is evaluating its ability to finance the rent payments on behalf of the team in order to maximize the present value of the team rent. This strategy would allow the County to leverage far more financing capacity than the Marlins could, even at a taxable rate. For this to occur, the Marlins would be required to provide substantial credit support in addition to contractually obligating team revenues as a guarantee rent payments will be made. Recognizing visitors and residents throughout the State enjoy the Florida Marlins, and that a new ballpark will be a costly undertaking, State participation is important. While State funding may not be approved during this legislative session, assuming State funding will never be available for this project is not realistic either. For this reason, State funding is included as the last component of the financing plan. Without State participation financing the additional amount would be unreasonable for the local participants. If this occurs, the Marlins will have to decide how and if they can proceed. It is our expectation, following final determination of the ability to secure State funding, this preliminary term sheet will be presented to the appropriate committees and both Boards for approval. Once both Boards have approved the preliminary term sheet, the County and City will begin to negotiate several other required documents and agreements with the Marlins, such as a development and operating agreements, non -relocation agreement, and lease agreement among others. We recognize the local, regional and statewide importance of this project and feel a successful public -private partnership can be fostered on the basis of this proposed preliminary term sheet. We believe the Orange Bowl is the best site available for this project and one that will reinforce and promote development opportunities in the area. We hope the preliminary term sheet and funding plan provides you with useful information on the status of this project and look forward to further discussing the details of this project with you. Attachments FLORIDA MARLINS BALLPARK MIAMI-DADE COUNTY, CITY OF MIAMI, AND FLORIDA MARLINS, L.P. PRELIMINARY TERM SHEET Miami -Dade County (the "County"), the City of Miami (the "City") and the Florida Marlins, L.P. (the "Marlins"), subject to final approval of the Board of County Commissioners and the City of Miami Commission, agree to the following Preliminary Term Sheet regarding the development and construction of a retractable roof baseball stadium (the `Ballpark") that will include a 2,500-car structured parking garage ("Ballpark Garage"): PROJECT: PROJECT DESCRIPTION: BALLPARK: LESSOR: LESSEE: PROJECT COSTS: The Ballpark and Ballpark Garage. The Ballpark and Ballpark Garage will be located at the Orange Bowl site in the City of Miami. The site is generally bounded by SW 17`h Avenue (west), NW 3rd Street (south), NW 7th Street (north), and the Orange Bowl (east). The Ballpark will include a retractable roof, approximately 38,000 seats of which 3,000 are premium seats, and 62 luxury suites. It will also include an aquarium, a community center and other ballpark attractions. The City or County will own the land (depending on legal and financial requirements) and the County will own the Ballpark. In addition, the City will own the Ballpark Garage. The Marlins will enter into a lease for the Ballpark and a use agreement for the Ballpark Garage. The estimated total project cost for the Ballpark and Ballpark Garage is approximately $367 million. 1 MARLINS CONTRIBUTION: The Marlins shall contribute an amount equal to $20 Million. Prior to commencement of construction, the Marlins will provide evidence in a form acceptable to the County and the City, of the Marlins ability to fund the $20 Million. BALLPARK LEASE: TICKET SURCHARGE: The initial lease term will be thirty-two (32) years. The annual base rent payment will be in an amount necessary to secure $127 Million Dollars in 2004 net present value over the term of the lease. The County will consider financing the rent payments over the term of the lease provided the Marlins lockbox contractually obligated ballpark revenues to securitize the rent payments. A subsequent lease term will be required until such time that all public debt issued for the construction and development of the Ballpark is retired. In an effort to have the ballpark users participate in the funding of the new ballpark, the Marlins will commit to collect and remit to the County a ticket surcharge on tickets for all events in the ballpark. The surcharge is estimated to generate $10 million towards the financing of the Ballpark and amounts to approximately .70 cents per ticket. CITY CONTRIBUTION: The City will contribute $28 million in Tourist Development Tax funds as outlined in Appendix A. This contribution will be used to acquire land, infrastructure costs and to contribute towards the Ballpark financing. COUNTY CONTRIBUTION: The Board of County Commissioners approved, by Resolution 1182-03 on November 4, 2003, a pledge of: (i) Convention Development Taxes in the amount of $35 million and; (ii) Professional Sports Franchise Facilities Tax in the amount of $38 million. In addition, the County recommends increasing the CDT contribution by $47 million, as outlined in Appendix A, a portion of this increase is contingent upon the sale of the Miami Arena. BALLPARK GARAGE: The project includes a 2,500-car parking garage (estimated cost to be $32 million). The City and Marlins shall negotiate necessary agreements to finance and operate the garage. The City will finance the garage for the Marlins who will in turn lockbox contractually obligated ballpark revenues to securitize garage debt payments to the City. The Marlins will develop and operate the parking garage 2 and retain all parking garage and surface parking revenues on baseball game -days. The Marlins and City will also share parking revenues for non -baseball game day events at the Orange Bowl and Ballpark. STATE CONTRIBUTION: The Marlins, City and County are seeking State participation in the amount of $30 million (2004 net present value) to complete the Ballpark financing plan. BALLPARK OPERATIONS: The Marlins will be responsible for the management, operation, marketing and maintenance of the Ballpark and all expenses associated with the Ballpark. COST OVERRUNS: The Marlins shall be the sole party responsible to cover any and all costs of the Ballpark in excess of the Marlin's stated Ballpark design and construction estimate of $325 Million. OTHER TERMS: The Marlins will not enter into or continue any negotiations with any parties other than the County and the City regarding the location/relocation of the Marlins. Upon the sale or transfer of controlling interest in the Marlins, the Marlins will share with the County and City in the enhanced value of the franchise (based upon a to -be - determined formula). The following must be satisfied after this Preliminary Term Sheet is accepted: • Approval for all public -sector (County, City, State) funding as set forth in Appendix A; • Assemble the site for the Ballpark and Ballpark Garage. • Execution by the County, the City and the Marlins of all agreements required to construct, develop, and operate the Ballpark and Ballpark Garage which include, but may not be limited to: o Development Agreement o Operating Agreement o Parking Use Agreement o Non -relocation Agreement o Non -cancelable Lease Agreement 3 Appendix A Orange Bowl Site Ballpark Financing Plan Project Costs Ballpark Parking Garage Land & Infrastructure Total Costs Local Contribution Florida Marlins (derived from new ballpark revenues) Team Rent Project Equity 1 Ticket Surcharge (paid by Fans) Parking Revenues City of Miami Tourist Development Tax Sub Total Sub Total Sub Total Miami -Dade County Convention Development Tax (per Reso 1182-03) 2 Convention Development Tax (FY 2004 base adj) 3 Convention Development Tax (Arena Sale) Professional Sports Facilities Franchise Tax Sub Total Total Local Contribution y State Contribution Professional Sports Facilities Sales Tax Rebate Sub Total Total Funding Remaining Project GAP Ballpark 325,000,000 32,000,000 10,000,000 367,000,000 Funding Sources 127,000,000 20,000,000 10,000,000 157,000,000 32,000,000 32,000,000 28,000,000 28,000,000 35,000,000 24,000,000 23,000,000 38,000,000 120,000,000 337,000,000 30,000,000 30,000,000 367,000,000 0 Notes: - All figures are shown in 2004 present value amounts 1. Surcharge is approximately .70 cents per ticket starting in 2007; 32 year term 2. Additional future CDT capacity is generated by adjusting the FY 2004 CDT base budget ($28M) to a mid year CDT projection figure ($30M); Long term growth projections (3.9%) remain the same as presented during the November 4, 2003 BCC meeting 3. Additional CDT capacity will be generated as a result of the Miami Arena sale. The sale proceeds used to defease the MSEA bonds will eliminate the current CDT debt service payments thereby freeing up future CDT capacity