HomeMy WebLinkAboutFresno Diamond Group loan 04301996r FIESWI REPORT TO THE CITY COUNCIL
AGENDAITEMNO. /0:30dM
COUNCIL MEETING 04/31/96
Apdi 25.1996
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FROM: MICHAEL A. BIERMAN, City Manager
SUBJECT: APPROVE THE REQUESTED $9 MILLION LOAN TO FRESNO DIAMOND GROUP AND
AUTHORIZE CITY MANAGER TO NEGOTIATE THE TERMS AND CONDITIONS
BACKGROUND
Fresno Diamond Group (FDG) has approached the City with a requestimra $9 million loan to be used
as part of a $38 million financing plan for the acquisition of a Triple -A baseball team and the
construction of the downtown stadium. A copy of the financing plan is provided as Exhibit 1 for your
review,
The requested loan from the City would be conditioned on the following events occurring prior to the
release of the loan proceeds:
• FOG will have received contributions of new cash equity In the amount of $9 million;
• FDG will have acquired a Triple -A baseball franchise and territorial rights for baseball play In
Fresno; and
• FDG will have obtained a construction loan for the full amount necessary for completion of the
downtown stadium,
The terms and conditions of the loan would be negotiated by FDG and the City Manager and
Presented to the City Council for final approval. The conditions for repayment would be performance
driven, similar to that of the Zacky Farms agreement. Specific revenues generated by the stadium will
be designated as the source of repayment of the loan, and may Include admission fees, property
taxes, parking fees, and room taxes. Fresno Diamond Group has proposed to earmark a front fee
or tax In an amount at least $407,250 per annum for this purpose. Staff may wish to consider oMer
sources of fees or taxes that could be earmarked as a subsbude for the proposed ticket revenue, and
which provide the City with a more reliable level of annual revenue. The repayment of the loan will
be otherwise unsecured.
FOG has prepared a schedule that anticipates City revenues from the operation of the stadium to
range from $739,000 to $881,000. City staff have not fully analyzed these projections, which are
provided as Exhibit 2 of this report.
THEISSUE
Should the City Council approve the requested $9 million loan to Fresno Diamond Group, and
authorize the City Manager to negotiate the terms and conditions thereof?
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:Repdd to the City Council
April 25, 1996
Page 2
CONCLUSIONS AND RECOMMENDATIONS
It is my recommendation that the City Council approve the requested $9 million loan to Fresno
Diamond Group, and authorize the City Manager to negotiate the terms and conditions thereof?
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THE FnsNo Dumorm GRoup
RUT
I. The total project budget is $39,000,000. The following is a breakdown,
by broad categories, of the sources and uses of funds:
E�
Fresno Diamond Graup, Inc.
capital invested thru 1995 $ 1.000,000
New equity capital, primarily
from local investors 9,000,000
Construction loan from
comemcmd can source 19,000,000
City payment ortax-
partidpation loan 9.000000
TOTAL: S38.000 000
Land mot $ 750.000
Architectural Costo.
corutructicn costs, and
construction financing
costs for stadium 26.250,000
Team purchase 5,000,000
Development costs and
start-up aperating capital 3.000 000
TOTAL: $38.00Q000
000
EXHIBIT
Y
yr x sanea7
. nvsxo.
a asixr
. uael "2 19o4. r.0 (aae) aea-ann
Room Tax Increment
TOTAL DIRECT II898M06S s66o.9so 9809.875 5139.000
'Management estimates 514,500 tickets for all events,
annually.
'Applicable to attendance -related estimates only.
'Applicable to attendance -related estimates only.
2
PROJECTED REVENUES TO CITY OF FRESNO
AND REDEVELOPMENT AGENCY
Mengpceant
Projection' 958'
S0i'
Ticket
or Seat Fee or
Tax --$1.00
x 407,250 $407,250 $409,250
$407,250
City $1.00
snare of Parking
514,500
visitors/
3 Persons per car
75€ use
of City lots 203,500 152,625
101,750
Stadium
Property Tax
Increment 190,000 190,000
190,000
Room Tax Increment
TOTAL DIRECT II898M06S s66o.9so 9809.875 5139.000
'Management estimates 514,500 tickets for all events,
annually.
'Applicable to attendance -related estimates only.
'Applicable to attendance -related estimates only.
2
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CITY COUNCIL'S OFFICE
DATE: April 26, 1996
TO: MICHAEL A. BIERMAN. City Manager
FROM: DANIEL RONQUILLO, Councilmember
DOWNtrict S
SUBJECT: DOWNTOWN STADIUM �
As the Councilmember representing the downtown area, this memo is written to express my
support for the downtown stadium.
When completed, the stadium may generate as much as $800,000 per year in direct revenue
to the City. But more importantly, the stadium operations will also .generate millions of
dollars in new jobs and economic activity for the businesses, shops, and restmmants in the
downtown arms. This activity will cause property values to increase in the downtown areas.
This will help redevelopment tax increment revenue for the City.
Construction and operation of Ne stadium is an absolutely critical part of the revitalization of
downtown Fresno. Wecannot afford to let this opportunity slip away.
1 want to discourage further use of redevelopment funds for not project, however, Ne
necessary bonding security should come from another source.