Friday, September 5, 1997
Stadium price tag: $400.3M
County gives estimate to bond agencies
BY LUCY MAY
Top county officials presented that estimate Thursday to two bond rating agencies in New York that will decide how risky it is for investors to buy bonds for the project.
The county told analysts it plans to issue $322.7 million in 30-year bonds. The bulk of the proceeds from the county's half-cent-on-a-dollar stadium sales tax increase will be used to repay the debt.
Final financing costs aren't known. But if commissioners financed $322 million through 30-year bonds at 5.25 percent interest, financing would add about $300 million to taxpayers' ultimate costs over 30 years.
Depending on interest rates and other factors, the county's debt service payments for Paul Brown Stadium are expected to range from $17 million to $27 million each year.
Hamilton County Commission President Bob Bedinghaus said Thursday the price of the stadium project is not unreasonable for what the county is trying to accomplish.
"The scope of the project changed for very good reasons the city, county and community embraced," he said. "That is, to keep open the riverfront for future generations."
The $400.3 million cost estimate breaks down as $383.5 million for all construction, demolition, infrastructure and land acquisition costs. It also includes $16.8 million for the initial costs of borrowing the money.
The construction number is much higher than the figures used during the successful 1996 campaign to increase the county sales tax by a half-cent-on-the-dollar to fund the project.
In fact, the combined total of new stadiums for the Bengals and Reds plus interest costs if the Bengals debt isn't paid off early could ultimately be closer to $1 billion than the old $544 million estimate.
But the basic stadium cost is comparable to those of similar projects around the country. The overall project cost grew when the county and city decided to push the Bengals farther west to keep the central riverfront open for future development, Mr. Bedinghaus said.
"That's a small price to pay so that future generations have that central riverfront available for other development, even if it's just parks," he said.
During their meetings Thursday in New York, top county officials and their advisers detailed the financing plans.
The county would issue $322.7 million in bonds. From that, $13.6 million would be taken off the top to establish a "debt service reserve fund" - a kind of cushion for the county.
Another $3.2 million would be used to pay the costs of issuing the bonds themselves, including fees to the bond underwriter, lawyers and printing costs.
The reserve fund and the rest would be invested
immediately, earning interest that would help pay for the stadium costs, too. The county expects to earn at least $22.6 million in interest on the bond proceeds.
The county expects the state to contribute at least $30 million toward the cost of the project. The state budget already includes a $15 million contribution.
In addition, the county has already raised $25 million through the sale of "Charter Ownership Agreements," or COAs, to Paul Brown Stadium. Those agreements give fans the right to buy season tickets.
All that adds up to $400.3 million. County officials think those numbers are conservative, meaning the state might contribute more money or more money might be raised through the sale of COAs. The cost of the stadium itself could change, too. The county's construction manager won't have a "guaranteed maximum price" until December. It could be a bit higher or lower than the basic $270 million cost for the stadium itself.
Lawyers for the county also continue to negotiate with property owners to buy the riverfront land needed for the stadium.
The county has budgeted $50 million for land. But juries could order the county to pay land owners more.
County officials expect to finish buying the land in January and begin stadium construction in March. The stadium is scheduled to open for the 2000 football season.
As part of their pitch to the ratings agencies, county officials said the sales tax increase will be plenty to pay for new homes for both teams.
The county's strategy is this: Borrow lots of money for the Bengals stadium now while interest rates and borrowing costs are lower. Save up the cash that comes in from the sales tax to use for the Reds. Then borrow less for the Reds project - when interest rates are likely to have increased.
"The Marge Schotts of the world could make the argument that we're spending more on bond service for football than baseball," Mr. Bedinghaus said, referring to the Reds owner. Instead, the strategy will ensure the county will be able to build the Reds ballpark in the way that makes most sense for taxpayers, he said.
The Cincinnati Enquirer
Footing the bill
The big question is how the county will pay that price.
Reds on deck
The Bengals stadium process offers a primer on what to expect from the county regarding its stadium deal with the Reds. The county and Reds haven't reached even a preliminary agreement to build a ballpark, although negotiations are continuing.
Moody's, S&P hear county's pitch Spetember 5, 1997
Previous stories
Lawsuits put blitz on landowners August 13, 1997
Stadium estimate tops $300 million August 12, 1997
Stadium land cost a big if July 21, 1997
Who are the landowners? July 21, 1997
Stadium meeting tone upbeat July 11, 1997
City threatens to withhold land July 10, 1997
Disputed county deal mirrors old city pact July 9, 1997
Mayor rips county's deal with Bengals July 4, 1997
COA complaints take a back seat June 5, 1997
Next hurdle: Stadium land May 31, 1997
Bengals won't sell naming rights May 31, 1997
WELCOME TO PAUL BROWN STADIUM May 30, 1997
NEXT GENERATION OF BROWNS MAKE THE DEAL May 30, 1997
It's goal to go for stadium May 29, 1997
Details remain before construction begins May 29, 1997
Stadium victory at hand May 26, 1997
Terms of the deal May 26, 1997
Regional effort fills seats May 25, 1997
Bengals reach sales goal May 24, 1997
Hold on: Shirey wants to boost admissions tax May 24, 1997
Brown, county race deadline May 21, 1997
NFL committee OK's lease May 20, 1997
Ticket tax increase gains steam May 20, 1997
Stadium team tries to trim $48M May 6, 1997
Bengals ask lease by May 20 April 30, 1997
Stadium redesign well received April 25, 1997
Bengals leery of Wedge April 9, 1997
Stadium price tag growing April 3,1997Stadium gaining ground? April 2,1997
Bengals won't sign till tax dies March 25,1997
Mike Brown's 'Letter to the Editor' March 25, 1997
Bengals balk at tax plan March 24,1997
Bengals want county blitz on seat licenses March 21,1997
City balks at size of stadium March 15,1997
Seat sales on target for team to stay Feb. 19,1997
'The Jungle' moving to Central Ave. Feb. 14, 1997
Stadium site to be announced this week Published Feb. 9, 1997
Seat license sales pass $20M goal Published Feb. 7, 1997
Consultants favor Riverfront West Published Dec. 20, 1996
Seat licenses $300 to $1,500 Published Dec. 18, 1996
Rules, procedure for buying seat licenses Published Dec. 18, 1996
Designs draw oohs and ahhs Published Dec. 17, 1996
Architect's drawings revealed Published Dec. 8, 1996
Site selection is a decision of a lifetime Published Dec. 2, 1996