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HomeMy WebLinkAboutIR 6977 INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6977 �,,N T`"E� October 23, 1984 E�oRr,�o To the Mayor and Members of the City Council ' �rsxAy Subject: PROPOSAL FOR RENOVATION AND OPERATION OF THE NORTHSIDE COLISEUM Background During the Pre-Council meeting on October 16, 1984, representatives of 4friad Corporation briefed the City Council on redevelopment plans for a section of the Stockyards area. The proposal calls for an expenditure of both public and private funds in order to complete the projects. M&C G-6144 provides details on this plan and is on the City Council Agenda for the meeting on October 23, 1984, for City Council action. City funds in the amount of $3,017,860 will be useed to renovate the Northside Coliseum and pay for the City's match on an Economic Development Administration (EDA) grant of $600,000 that will be used to convert Commerce Street to a pedestrianway. The remainder of the funds will be used to provide parking, bulid a new restaurant facility, remodel the exhibits building and Billy Bob's Texas, expand the Commerce Street project, perform leasehold improvements and for working capital. A proposed office and museum financed by the Texas Longhorn Breeders Association of America is included in the private funding. City Funding On June 12, 1984 (M&C G-6025), the City Council approved the submission of a grant application to EDA in the amount of $600,000 for converting Commerce Street into a pedestrianway. Authorization also was given to use $217,860 from the capital projects reserve fund as the City's match. Triad Corporation is requesting that the City Council authorize the issuance of $2.8 million in certificates of obligation bonds to make improvements to the Coliseum. Structural renovations are estimated to cost about $1.8 million and $1 million would be used for leasehold improvements. In addition to the City's share, Triad proposes to finance an additional $1.2 million that will be used for improvements to the sound and lighting system, rodeo pens, and some electrical work. The certificates of obligation will be for a period of fifteen (15) years. Triad has agreed to be responsible for retiring the debt on the $1 million that will be used for leasehold improvements. They propose to do so by entering into a lease that has a minimum guarantee of $129,000 per year, or whatever other amount determined to be necessary to retire the debt over fifteen years. The amount has been calculated based on the assumption of a 107 interest rate. They have agreed to continue to guarantee for an additional five years after the debt has been retired. Therefore, their request is to enter into a twenty year lease. They have also requested two (2) five year options. ISSUED BY THE CITY MANAGER — — FORT WORTH, TEXAS -�— INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6977 - p.2 y,,,P T I AfO October 23, 1984 poi fOR7. To the Mayor and Members of the City Council s -� yTexPy� PROPOSAL FOR RENOVATION AND OPERATION OF THE NORTHSIDE Subject: COLISEUM eT� The proposal also includes the stipulation that the City will receive a percentage of gross from food and beverage sales at the Coliseum, or the minimum guarantee, whichever is greater. The percentage will be 5% durign the first years, 8% during the next five years and 10% during the remaining ten years. General Conditions Prior to any final action by the City Council to sell certificates of obligation, the following general conditions will be met: 1. A waiver must be received from EDA to allow the City to enter into a long term lease of the Coliseum. This is necessary due to an agreement that was signed with EDA in 1974 after a grant was received to carry out minor renovations to the Coliseum. 2. An acceptable lease must be negotiated with Triad Corporation. 3. Triad must provide evidence that firm financial commitments are in place for completion of the remainder of the project. 4. A limit on the level of City participation in the project will have to be agreed to by both parties. Additional Information Several questions have been raised about the project that require additional clarification. 1. What guarantee will the City have that the lease payments will be paid, in the event the venture is not as profitable as has been projected? Triad Corporation will be the party entering into the lease. Therefore, it will be a corporate obligation of Triad and its assets will be committed to the guarantee. In addition, the City's bond counsel will be consulted on protection clauses that should be included in the lease agreement. 2. How will the City be assured that if the Coliseum is sub-leased, it will continue to be used for the overall benefit of the Stockyards area? Triad is agreeable to restrictions on the utilization of the Coliseum to assure its continued use by the public and use for the overall benefit of the Stockyards and Northside area. In addition, the lease will contain a clause that requires prior written approval from the City in order to enter into a sub-lease. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS �— r � INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6977 - p.3 �IIT ER,a A.Uf0fir To the Mayor and Members of the City Council October 23, 1984 �Tfxpy Subject: PROPOSAL FOR RENOVATION AND OPERATION OF THE NORTHSIDE '07 COLISEUM 3. What information is there on how the developers portion will be capitalized? The developers have agreed that all documentation pertaining to Triad's capitalization and financial resources must be provided for review and analysis, prior to the City's issuance of certificates of obligation. 4. What is the schedule for sale of the industrial development bonds for parking lot? The developers have indicated that the sale of $2,000,000 in industrial development bonds is scheduled to be completed concurrently with all other financing for the development, which is planned to be completed by January, 1985. 5. Will the City continue to be responsible for fire and content insuance? -' Triad has agreed to accept responsibility for all insurance coverage on the Coliseum, including fire, content and liability. 6. How much interest would be earned over 15 or 20 years if $3,000,000 is invested in certificates of deposits? Since the funds are not currently available, the $3 million would have to be borrowed in order to purchase CDs . The amount earned would be the difference between the interest the City receives from the investment and the amount it has to pay in interest for borrowing the funds? 7. Since only 20% of the revenue from sales and ad valorem taxes is presently dedicated to debt service, how much would be available to service the $1.8 million if that factor is used, instead of 100%? Bases on the projections included in the proposal, the City would benefit from an increase of $100,000 in ad valorem taxes and $200,000 in sales taxes. If 100% of this amount is dedicated to servicing the debt on $1.8 million, sufficient funds would be available. If, on the other hand, only 20% of this amount is used, about $60,000 would be available, or about 1/4 of the required amount. The projected total over a twenty year period does not include any adjustments for annual growth. Nor does it include any surpluses about the $129,000 that may result beginning with the sixth year of the lease as a result of exercising the percentage of gross option. ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS --- INFORMAL REPORT TO CITY COUNCIL MEMBERS No. 6977 - p.4 NAP T114, October 23, 1984 �of40RT�p To the Mayor and Members of the City Council q �S Subject: PROPOSAL FOR RENOVATION AND OPERATION OF THE NORTHSIDE '°" COLISEUM Summary Specific details of the proposal will have to be worked out prior to requesting formal City Council action on a lease or the sell of certificates of obligation. The purpose of this informal report and M&C G-6144 is to request City Council guidance on this matter. * * * * * * * * * * If additional information is desired, it will be supplied upon request. Robert L. Herchert - City Manager RLH:jc ISSUED BY THE CITY MANAGER FORT WORTH, TEXAS -�-