Estrada Hinojosa is serving as sole financial advisor to the City of Arlington (the “City”) on a new $1 billion ballpark for the Texas Rangers, the Major League Baseball franchise. This new stadium, scheduled to open for the 2020 season, will be located adjacent to the current ballpark and within walking distance to the AT&T Stadium, where the National Football League Dallas Cowboys play. Estrada Hinojosa has worked with the City for the past few years to refund/restructure existing debt and to facilitate the financing of this new stadium. The City held a successful venue election in November 2016 which allows for both the existing Cowboys debt and the new Rangers debt to be serviced from the same taxes. Under current finance plans, the City is expecting to refund approximately $145 million of existing Cowboys bonds later this year and to issue new money bonds of approximately $500 million for the Rangers in early 2018 to finance City-related expenses of the ballpark project.
Background: Estrada Hinojosa has been the sole FA to the City of Arlington since 2009. During this time, we have helped the City with the sale of 49 transactions for a combined par value of $1.37 billion, including the three transactions for the Rangers ballpark. Previously, we worked with the City as an underwriter, including the 2006 transaction to finance the new Cowboys stadium. In our current role as financial advisor, we have worked closely with City staff to analyze different scenarios to finance the construction of a new ballpark for the Texas Rangers. This would replace the existing Globe Life Park where they currently play. In part as a result of our analysis, the City undertook a vote to allow special taxes collected by the City to support both the existing Cowboys and new Rangers related debt, enabling the financing of the ball park. The special tax measure was overwhelmingly approved by voters in November 2016. These special taxes consist of a half percent (0.5%) sales tax, two percent (2.0%) hotel tax, and five percent (5.0%) short-term vehicle rental tax. These taxes will serve as the pledged revenues of the ballpark financing.
Transaction: The new ballpark financing consists of a two-step process: a) a refunding of outstanding Cowboys related debt, and b) a new money transaction for the new ballpark. The refunding of $145 million of existing debt, which will took place early fall 2017 and will be used to create debt service savings and to facilitate the new money issuance. The refunding will produce over 5% PV savings but will also push back the final maturity of existing debt by nearly a decade. Currently collected excess revenues will also be used to reduce the size of the refunding escrow. The new money transaction, which is scheduled to occur in early 2018, will fund a project fund of $500 million, consist of senior and subordinate lien bonds, and include escalating debt service that matches the growth of the pledged revenues. The transaction will consist of both tax-exempt and taxable debt, with current interest bonds and possibly some capital appreciation bonds, and covenants that allow for excess revenues to be used to turbo bonds (accelerate payment) prior to their stated maturity. In total, the City expects to issue nearly $590 million in debt to refund the existing debt and provide net proceeds to construct the stadium.
Estrada Hinojosa has worked cooperatively with City staff, the senior manager, and other finance team members to produce a finance plan that it will execute over the next half year.
Rent: Base rent of $2 million /year also pledged to the taxable bonds
Rangers and Cowboys Special Tax Revenue Bond Debt Profile.
Rendering of the new Rangers Stadium