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Convention Partnership

Convention Partnership. DRAFT for Policy Discussion Only. Finance Working Group. March 22, 2011. Agenda. Financing BCEC Expansion Financing Approach to 3 “Buckets” Next Steps. DRAFT for Policy Discussion Only. Financing BCEC Expansion. 3. Developments Costs (Net of Parking).

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Convention Partnership

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  1. Convention Partnership DRAFT for Policy Discussion Only Finance Working Group March 22, 2011

  2. Agenda • Financing BCEC Expansion • Financing Approach to 3 “Buckets” • Next Steps

  3. DRAFT for Policy Discussion Only Financing BCEC Expansion 3

  4. Developments Costs (Net of Parking) • New Multi-purpose Space (Southeast Option): • Development Cost = $295.0 million • Contingency (25%) = $73.8 million • Total Cost = $368.8 million • Expanded Exhibit Hall and Meeting Rooms (Southeast Option): • Development Cost = $510.4 million • Contingency (25%) = $127.6 million • Total Cost = $638.0 million • Total Development Cost of $1.0 billion Source: Tishman

  5. Financing Assumptions • Bond Issuance on 7/1/13 • 30 Year Amortization • Level Debt Service • Interest Rate of 5.75% • Fully Funded Debt Service Reserve Fund • Assumes Initial Implementation Phase has been completed • Estimated cost of $211.8 - $361.1 million

  6. Multi-purpose Exhibit Hall & Space Meeting Rooms Sources of Funds Total Par Amount of Bonds $ 401,405,000 $ 694,385,000 $ 1,095,790,000 TOTAL SOURCES OF FUNDS $ 401,405,000 $ 694,385,000 $ 1,095,790,000 Uses of Funds (1) Project Development Cost Fund $ 368,815,148 $ 638,013,156 $ 1,006,828,304 Debt Service Reserve Fund 28,572,275 49,423,875 77,996,150 Costs of Issuance 4,017,578 6,947,969 10,965,546 TOTAL USES OF FUNDS $ 401,405,000 $ 694,385,000 $ 1,095,790,000 • Project development cost estimate provided by Tishman. Does not include parking costs. • Based on the outstanding capital reserve requirement for the Commonwealth’s Series 2004 & 2005 special obligation bonds (Lesser of: 10% of par; Maximum Annual Debt Service; 125% of Average Annual Debt Service) Sources & Uses of Funds (2)

  7. Revenues Revenues Revenues Development Estimated Needed for Needed for Needed for Cost Debt Service 1.00x Coverage 1.25x Coverage 1.50x Coverage Multi-purpose Space $ 368.8 $ 28.6 $ 28.6 $ 35.7 $ 42.9 Exhibit Hall & Meeting Rooms $ 638.0 $ 49.4 $ 49.4 $ 61.8 $ 74.1 Total Expansion $ 1,006.8 $ 78.0 $ 78.0 $ 97.5 $ 117.0 Revenues Need to Fund Expansion ($ Millions)

  8. Incremental Tax Revenues From Expansion (1) • Incremental State Tax Revenues (stabilized year): • Occupancy Tax (5.7% to CCF) $4,176,328 • Occupancy Tax (2.75% to CCF) 2,014,895 • Sales Tax (6.25%) 10,068,636 • State Income Tax 6,738,904 • Total Incremental State Tax Revenues $22,998,763 • Incremental City Tax Revenues (stabilized year): • Occupancy Tax (6.0%) $4,396,134 • Property Tax ($4,400 per room) 4,400,000 • Total Incremental City Tax Revenues $8,796,134 • Total State and City Incremental Annual Tax Revenue of $31,794,897 • (1) Assumes development of new HQ Hotel, new BCEC Multipurpose Space, Exhibit Hall Expansion and associated Meeting Rooms.

  9. Commonwealth Occupancy Tax Revenue • Commonwealth collected $152.3 million from the 5.7% occupancy tax in FY 2010 • 1% of the 5.7% equals approximately $26.7 million • Options may include: • 1. Re-directing a portion of existing occupancy tax collections • 1% - $26.7 million • 2% - $53.4 million • Raising existing occupancy tax levy • 0.5% Statewide increase - $13.3 million • 1.0% Statewide increase - $26.7 million • 0.5% CCF District - $ 1.7 million • 1.0% CCF District - $ 3.5 million

  10. DRAFT for Policy Discussion Only Financing Approach - Part One Initial Implementation Steps 10

  11. Financing Approach – Part One Initial Implementation Steps Early Action Items and Budget

  12. Financing Approach – Part One Initial Implementation Steps Early Action Items and Budget

  13. Financing Approach – Part One Initial Implementation Steps

  14. Financing Approach – Part One Financing Implementation Steps • Early Action Items: $3.6 million • Cost Range – Full Program: $211 - $361 million • Funding Source: Existing Convention Center Fund

  15. DRAFT for Policy Discussion Only Financing Approach – Part Two New Headquarters Hotel 15

  16. Financing Approach – Part Two Headquarters Hotel RFP

  17. Financing Approach– Part Two Options after Receipt of Proposals: • Pursue Public / Private Approach • Funding Plan for Financing “Gap” • OR … • Reject – Pursue Publicly Financed and Owned Hotel • OR … • Reject – Do Nothing

  18. DRAFT for Policy Discussion Only Financing Approach – Part Three BCEC Expansion 18

  19. Financing Approach – Part Three Additional Annual Revenues Required • Assuming $ 1 Billion Expansion Cost • $78 million to $117 million • Numerous Options, Including: • Remaining Capacity of the Convention Center Fund • Incremental Revenues from Expansion • “Capture” Existing Occupancy Tax Revenues • Changes in Hotel Occupancy Tax Rates

  20. Financing Approach – Part Three BCEC Expansion Financing Conclusion: • Is Policy Question • Beyond Charge / Mandate of Convention Partnership • Partnership Recommends Further Study by Legislature

  21. DRAFT for Policy Discussion Only Next Steps 21

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