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Padres Protection Of Revenues

BALLPARK AND REDEVELOPMENT PROJECT
PADRES PROTECTIONOF REVENUES

 

Term: Ten years (FY 2002 through FY 2011 ­ using FY 2000as the first base year for the rolling three-yearcalculation)
 
Termination Events: Construction and operation of 2,500 hotel rooms on the10th Avenue Marine Terminal property, including theCampbell 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 annualfinancing payment. The Fund is established to offsetany fluctuations in revenue sources used to support thepayment on the financing.

The Padres protection would provide funds to replenishthe Fund in the event that the average revenue growthover the three previous years is less than 8% and it isnecessary to use the Fund to make a portion of theannual payment on the financing.
 
Padres Payment: The Padres payment amount would be the lesser of thefollowing calculation on the current fiscal year or on thelast three years as illustrated in Exhibit 1 of thisAttachment and would be made ninety (90) days afterwritten notice to the Padres of the amount determinedby the 1year/3year formula, as illustrated by Exhibit 1.

The Padres payment would be based on the ratio of theannual financing payment to the total receipts from thetax on hotel rooms. This ratio would then be applied tothe shortfall in receipts from the tax on hotel rooms. The shortfall would be the difference between actualreceipts from the tax on hotel rooms and the projectedreceipts from the tax on hotel rooms based upon anannual growth rate of 8%.
 
Reimbursement to the Padres: The Padres will be reimbursed with interest (at thePadres lowest cost of capital as certified by anindependent certified public accountant) when receiptsfrom the tax on hotel rooms grows at a rate greater than

The reimbursement to the Padres will be based on theratio of the annual financing payment to the totalreceipts from the tax on hotel rooms. This ratio wouldthen be applied to the surplus in receipts from the tax onhotel rooms. The surplus would be the differencebetween actual receipts from the tax on hotel rooms andprojected receipts from the tax on hotel rooms basedupon an annual growth rate of 8%.
 
Annual Payment Adjustments: To maintain the tax exempt status on any financing byany Party, any and all payment adjustments called forherein will be made through monetary additions to (orsubtractions from) the Joint Ballpark OwnershipExpenses provided for in Section XXII of the MOU,provided said adjustments shall be identical to theamounts called for herein.
 
Conditions to the Padres
Protection of Revenues:
  1. The City is not in default on any City obligations under theagreement for use and occupancy of the ballpark.
  2. Any Padre payment does not exceed the maximum annualprotection amount of $2 million.
  3. The sum of the current year Padre payment plus previouspayments does not exceed the maximum aggregateprotection amount of $8 million.

 

Exhibit 1

 

Example:

 

If in 2005, growth in receipts from the tax on hotel rooms is 6% and the average growthin receipts from the tax on hotel rooms for the preceding three Fiscal Years was less than8%, then a payment by the Padres to the Stabilization Reserve Fund would be required.

 

Year Projected

Receipts

 Percent

Change

 Actual

Receipts

 PercentChange 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:
 

Hypothetical Option 1:

  1. The Shortfall between projected receipts and actual receipts equals $2.7 million for 2005.
  2. The project financing payment ($20.7 million) is 14% of total receipts from the tax on hotel rooms($143 million) in 2005.
  3. The Padre Payment would equal $380,000, which is 14% of the $2.7 million Shortfall.

 

Hypothetical Option 2

  1. The Shortfall between projected receipts and actual receipts for three years (2003 through 2005) is $7.6million.
  2. The project financing payment ($20.7 million) is 14% of total receipts from the tax on hotel rooms($143 million) in 2005.
  3. 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 twooptions.

 

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