3/11/09 -SK BASEBALL AMENDMENTS - THE 'OFFICIAL' RELEASE - Reno, NV---The Reno City Council gave initial approval to changes to the existing agreement with SK Baseball and Nevada Land, LLC. to loan them money to ensure development of properties adjacent to the new Triple-A ballpark for restaurants, nightclubs and outdoor entertainment venues.
SK Baseball has invested $60 million in the stadium project so far, and is requesting City support to secure additional funds for further development. None of the money will be taken from the City’s General Fund, and the team has agreed to stay in Reno for a minimum of 15 years.
There are currently up to 275 construction workers employed to build the baseball stadium and this plan is designed to keep up to 125 of those people working past April and creates over 150 new jobs in the new restaurants and clubs.
In addition, the changes to the agreement will reduce the City’s total investment in the project by $6.6 million.
From the very beginning, the new stadium was viewed as a “catalyst project” that would stimulate the development of new businesses surrounding the stadium and have the potential to further change the face of downtown Reno. Due to the current economic climate, Council wants to work with SK Baseball and Nevada Land, LLC. to assist them in securing funding for the next phase of the project, keeping the momentum of stadium construction going.
This phase of the project will create a new outdoor venue for entertainment, provide new restaurants and nightclubs, and create additional retail space in the downtown, all within walking distance of several parking structures, existing businesses, the whitewater park, gaming, and the university.
The current agreement allowed for restricted funds to be used to finance a portion of the stadium project from the Redevelopment Agency’s property tax increment revenues generated from the project. By law, Redevelopment property tax increment funds cannot be used for any other use other than redevelopment. These funds cannot be used for schools, public safety, or any other governmental use.
These changes to the agreement will provide for a loan, if needed, to ensure that at least one million dollars a year is available for debt service until the project becomes self-sustaining. Once the project is self-sustaining, the tax increment will repay the Redevelopment Agency any funds it loans the project.
The agreement will not encumber taxpayers with debt or take money away from other governmental services. Due to the current economic climate and credit crunch, the amended agreement is necessary to allow the developer to secure financing for further development.
The stadium is projected to generate $480,000 in property tax value this year, compared to less than $35,000 the same land generated last year. This tax increment will be applied toward the first $1.0 million. Even with conservative estimates, any loaned funds are projected to be repaid within the first five years.
The details of the amendment are:
● Phase two of the stadium project-the entertainment district-will start now, rather than in future years.
● The changes remove a requirement in the current agreement that the City guarantee the first $5.0 million in tax increment in the first five years.
● The agreement increases the eligible annual tax increment payment to the developer from the existing $2.0 million to $2.5 million and ensures a minimum of $1.0 million is available each year. The additional $500,000 is to help finance the entertainment district.
● If those increment funds fall short of the $1.0 million minimum, the Redevelopment Agency will provide a loan using money from tax increment generated from the Agency’s Redevelopment Districts. We expect that loan to be less than $500,000 a year for three years.
● When the stadium project generates more than $1.0 million in tax increment, the excess will be used to repay the loan.
● If funding from the redevelopment districts is not available, the responsibility will accrue to the next year.
● If the amount cannot be generated within 20 years, the developer will forgive any obligation.
● In exchange, the developer will increase the minimum time for the team to stay in Reno from 10 to 15 years.
● Another new benefit is that the developer has also agreed to purchase the Regional Transportation Commission CitiCenter site for $6.6 million when it begins development.
The last point is significant as it saves the City of Reno’s Redevelopment Agency $6.6 million, reducing the entire investment by the City to about half of what it originally was. Under the original agreement, the Agency would have had to purchase this site for the Ballpark District development.
The stadium and related development is helping to further diversify the City’s economy and-according to a report by Economic Research Associates-will generate more than 15,000 new lodging room nights annually and $19.4 million in annual economic impacts.
Redevelopment projects, such as the West Street Market and Cabela’s, and downtown improvements, such as the whitewater park, have helped to create recreation and shopping opportunities for tourists and locals alike. This month it was reported that Reno gaming was slightly better than last year at this time, while Las Vegas experienced a 16% drop over last year.
The Baseball stadium alone is generating hundreds of jobs. In addition to the construction jobs and 50 positions at the team’s headquarters; SK Baseball anticipates hiring approximately 200 people to work on game days, and an additional 175 for concessions. The opening game is still set for April 17, 2009.
SK Baseball reported today that $1.9 million in season ticket sales has been generated so far exceeding their expectations, and 15 of the 20 boxes are sold.