Padres Protection of Revenues
Term
Ten years (FY 2002 through FY 2011 - using FY 2000 as the first base year for the rolling three-year calculation)
Termination Events
Construction and operation of 2,500 hotel rooms on the 10th Avenue Marine Terminal property, including the Campbell Shipyard Hotel
Maximum Total Guarantee
$8 million over 10 years
Maximum Annual Guarantee
$2.0 million
Purpose
Replenish the City Stabilization Reserve Fund (the "Fund"), which is equivalent to one-half the annual financing payment. The Fund is established to offset any fluctuations in revenue sources used to support the payment on the financing.
The Padres protection would provide funds to replenish the Fund in the event that the average revenue growth over the three previous years is less than 8% and it is necessary to use the Fund to make a portion of the annual payment on the financing.
Padres Payment
The Padres payment amount would be the lesser of the following calculation on the current fiscal year or on the last three years as illustrated in Exhibit 1 of this Attachment and would be made ninety (90) days after written notice to the Padres of the amount determined by the 1year/3year formula, as illustrated by Exhibit 1.
The Padres payment would be based on the ratio of the annual financing payment to the total receipts from the tax on hotel rooms. This ratio would then be applied to the shortfall in receipts from the tax on hotel rooms. The shortfall would be the difference between actual receipts from the tax on hotel rooms and the projected receipts from the tax on hotel rooms based upon an annual growth rate of 8%.
Reimbursement to the Padres
The Padres will be reimbursed with interest (at the Padres lowest cost of capital as certified by an independent certified public accountant) when receipts from the tax on hotel rooms grows at a rate greater than
The reimbursement to the Padres will be based on the ratio of the annual financing payment to the total receipts from the tax on hotel rooms. This ratio would then be applied to the surplus in receipts from the tax on hotel rooms. The surplus would be the difference between actual receipts from the tax on hotel rooms and projected receipts from the tax on hotel rooms based upon an annual growth rate of 8%.
Annual Payment Adjustments
To maintain the tax exempt status on any financing by any Party, any and all payment adjustments called for herein will be made through monetary additions to (or subtractions from) the Joint Ballpark Ownership Expenses provided for in Section XXII of the MOU, provided said adjustments shall be identical to the amounts called for herein.
Conditions to the Padres Protection of Revenues
- The City is not in default on any City obligations under the agreement for use and occupancy of the ballpark.
- Any Padre payment does not exceed the maximum annual protection amount of $2 million.
- The sum of the current year Padre payment plus previous payments does not exceed the maximum aggregate protection amount of $8 million.
Exhibit 1
If in 2005, growth in receipts from the tax on hotel rooms is 6% and the average growth in receipts from the tax on hotel rooms for the preceding three Fiscal Years was less than 8%, then a payment by the Padres to the Stabilization Reserve Fund would be required.
Year | Projected Receipts | Percent Change | Actual Receipts | Percent Change | Shortfall |
---|---|---|---|---|---|
2002 | $120.1 | $120.1 | $0 | ||
2003 | $129.7 | 8% | $126.1 | 5% | ($3.6) |
2004 | $136.2 | 8% | $134.9 | 7% | ($1.3) |
2005 | $145.7 | 8% | $143.0 | 6% | ($2.7) |
3-Year Total | ($7.6) |
Padres Payment would be the lesser of the following calculations:
- The Shortfall between projected receipts and actual receipts equals $2.7 million for 2005.
- The project financing payment ($20.7 million) is 14% of total receipts from the tax on hotel rooms ($143 million) in 2005.
- The Padre Payment would equal $380,000, which is 14% of the $2.7 million Shortfall.
- The Shortfall between projected receipts and actual receipts for three years (2003 through 2005) is $7.6 million.
- The project financing payment ($20.7 million) is 14% of total receipts from the tax on hotel rooms ($143 million) in 2005.
- The Padre Payment would equal $1.06 million, which is 14% of the $7.6 million Shortfall.
Thus, under these scenarios, the Padres would pay $380,000, which is the lesser of the two options.
ATTACHMENT F
Memorandum of Understanding
Attachments:Attachment A - Map of Infrastructure Improvements
Attachment A1 - Infrastructure Expense Summary
Attachment A2 - Roadway Improvement Detail
Attachment B - Land Acquisition Parcels
Attachment B1 - Land Acquisition Summary
Attachment B2 - Summary of 5,000 Parking Spaces
Attachment C - Hotel Credit Zone
Attachment C1 - Substitute Ancillary Retail Development
Attachment D - RFP/RFQ Zone
Attachment E - General Target Timetable
*Attachment F - Padres Protection of Revenues
Attachment G - Ballpark Protection Zone