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Nationals Park
Washington, DC |
Major League Baseball Team Relocation and Stadium Development
Components: Major League Baseball Ballpark (42,000 seats)
Project Value: $690 million
SAG was the financial advisor to the District of Columbia regarding the relocation of the Washington Nationals and development of a new ballpark. SAG led a multi-faceted team that addressed every issue associated with the project ranging from ballpark site evaluation to ballpark cash flow projections, finance plan development, programming, conceptual design, development budget estimates, finance plan legislation, outside infrastructure costing, land acquisition costing, preparation of the relocation "pitch book" to MLB, and ultimately negotiating the lease and ballpark development agreement with MLB.
The project budget increased over time as off-site infrastructure was added to the project and the finance plan evolved through a number of iterations. Ultimately, the ballpark was funded by team lease payments, taxes generated by ballpark activities, a business gross receipts tax (previously used for the MCI Center), and a business utilities tax.
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San Jose Convention Center Renovation & Expansion
San Jose, CA |
Convention & Conference Center
Components: Convention & Conference Center
Project Value: $300 million
SAG was the financial advisor for the renovation and expansion of the San Jose Convention Center, representing the facility manager, convention and visitors bureau, and hotel community. Following a failed voter referendum (by 2%) to fund the project, SAG created an alternative financing strategy that combined a unique Mello-Roos District with downtown redevelopment area tax increment financing.
Mello-Roos financing structures have been used throughout California to finance infrastructure related to residential and commercial master planned developments, but a district had never been created with existing hotels to finance convention infrastructure. Under this approach, hotel members in the district vote to self impose a tax to fund the project. The tax is based on hotel revenues, much like a hotel tax. These funds are monetized in the public bond markets and the project is funded. To maximize the proceeds that could be generated by the special tax, additional credit enhancement was created through the use of a "blinker tax" that would blink-on an additional 1% to replenish a debt service revenue stabilization fund if utilized. Theses funds were augmented by tax increment financing proceeds generated by the City's downtown redevelopment area to complete the project.
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Renaissance Schaumburg Hotel and Convention Center Complex
Schaumburg, IL (Chicago suburb) |
Convention Center and Hotel Complex
Components: Convention Center, 500-room Hotel
Project Value: $240 million
SAG was the financial advisor to the Village of Schaumburg, a Chicago suburb, regarding the financing of a hotel and convention center under a tax exempt structure. SAG led the transaction process addressing issues ranging from development team selection to bond structuring, cash flow modeling, rating agency and bond insurer presentations, and contract negotiations. SAG worked closely with the legal team and represented the Village on transaction documents, including the qualified management agreement, technical services agreement, operator loan (key money), pre-opening agreement, room block agreement, official statement, trust indenture, and other transaction related agreements.
The tax-exempt bonds were structured to be repaid by a mix of sources. The primary source of repayment was to be generated by hotel profits and the incremental taxes generated by the complex (hotel, sales and food & beverage taxes). Additional resources were allocated to the bonds to provide for shortfalls during the hotel's stabilization period and credit enhancement. These included a privilege tax, telecommunications tax, real estate transfer tax and food & beverage tax. To add further credit enhancement, the Village elected to issue the bonds as general obligations of the Village, even though the Village did not levy property taxes. However, property taxes would have to be levied if the above primary revenue sources were insufficient. The convention center and hotel opened in 2006.
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Hilton Americas-Houston
Houston, TX |
Convention Hotel
Components: 1,203-room Convention Hotel
Project Value: $285 million
SAG was the financial advisor to the City of Houston regarding the financing of a hotel under a tax exempt structure through a special purpose tax-exempt entity. SAG led the transaction process addressing such issues as creating the non-profit entity, development team selection, bond structuring, cash flow modeling, rating agency and bond insurer presentations, and contract negotiations. SAG worked closely with the legal team and represented the owner on transaction documents, including the qualified management agreement, technical services agreement, operator loan (key money), pre-opening agreement, room block agreement, official statement, trust indenture, and other transaction related agreements. The bonds were supported by hotel profits and a rebate of the city and state hotel taxes generated by the hotel. The city-wide hotel tax allocated to the City provided a credit enhanced to the transaction.
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Sheraton Myrtle Beach Convention Center Hotel
Myrtle Beach, NC |
Convention Hotel
Components: 402-room Convention Hotel
Project Value: $65 million
SAG was the financial advisor to the Myrtle Beach Convention Center Hotel Corporation and the City of Myrtle Beach regarding the financing of a hotel under a tax exempt structure through a special purpose tax-exempt entity. SAG led the transaction process addressing such issues as creating the non-profit entity, development team selection, bond structuring, cash flow modeling, rating agency and bond insurer presentations, and contract negotiations. SAG worked closely with the legal team and represented the owner on transaction documents, including the qualified management agreement, technical services agreement, operator loan (key money), pre-opening agreement, room block agreement, official statement, trust indenture, and other transaction related agreements.
The original financing structure utilized two traunches of bonds. The first traunch of $45 million was supported solely by the profits of the hotel. The second traunch of $20 million was also supported by hotel profits but included a credit enhancement by the city-wide hotel tax. After a troubled hotel opening due to economic and operational issues, SAG refinanced the first traunch of bonds postponing principal payments and lowering interest costs by incorporating the city-wide hotel tax credit enhancement feature utilized in the second traunch. The refinancing and management change enabled the hotel to meet cash flow expectations.
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Trenton Marriott Hotel and Conference Center at Lafayette Yard
Trenton, NJ |
Conference Center Hotel
Components: 200-room Conference Center Hotel
Project Value: $47 million
SAG prepared a conference center tax-exempt bond offering due diligence report for a development partnership, consisting of Acquest Realty Advisors, Inc., the State of New Jersey, the Trenton Parking Authority, the City of Trenton, and the Marriott Corporation. The study evaluated the lodging market, projected performance, and projected cash flows. The project was financed under a tax-exempt structure and the report was utilized by the development partnership, rating agencies and bond insurance companies in underwriting the bonds. The project was capitalized with $31 million in bonds supported by hotel profits, a state loan, NJEDA loan, CCRC loan, parking authority loan and a UEZ grant. The hotel opened in 2002.
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Dr. P. Phillips Performing Arts Center
Orlando, FL |
Performing Arts Center
Components: 2,800-seat Theater, 1,800-seat Theater, 300-seat Theater
Project Value: $400 million
SAG was the financial advisor to the Orlando Performing Arts Center Corporation related to the development of the Dr. P. Phillips Performing Arts Center in Orlando, FL. The project included a 2,800-seat amplified theater, 1,800-seat acoustic theater, and 300-seat theater. The site is also planned to include a 200-room hotel, two 400,000 sf office buildings, and 500 residential condominium units.
SAG created a comprehensive finance plan that addressed both development and operating costs. From a development perspective, SAG worked with the City of Orlando and Orange County to create a plan of finance that includes philanthropy, State grants, tax increment financing, tourist development tax, and the sale of the old PAC site. The operating finance plan addressed the sustainability of the PAC, providing ongoing operating support generated by the development of the commercial real estate, capturing the taxes generated by the site's commercial real estate, ongoing philanthropy, and securing annual funding commitments for capital replacements from the City.
SAG also led the effort to secure an $80 million line of credit to provide for upfront project costs that will be repaid by pledged donation collections over the construction period.
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