Agenda Item Title:
Authorize Mayor to execute certain documents which will commit the City to pay monies previously allocated for the renovation of Fitzgerald Stadium to a financial institution financing a portion of the project on behalf of Black Hills Sports, Inc.
Origination Group:
Legal & Finance Committee
Origination Meeting Date:
07/15/2020
City Council Hearing Date:
07/20/2020
Petitioner:
Black Hills Sports, Inc.
Staff Contact:
Joel Landeen, City Attorney
Agenda Item Summary:
During the last round of funding for Vision projects the City allocated money for renovations and upgrades to the City owned Fitzgerald Stadium. The Council initially allocated $1,650,000 out of the Vision Account to finance the project. This was much less than the estimated cost to fund the original proposal. In March of 2019, the Council decided to allocate the full $5 million to the project by paying for a portion of it out of the City CIP Fund. While using the CIP allowed the City to allocate sufficient monies to fund the entire project, $1,360,691 of the money allocated to the project will not be available until 2023 & 2024. In order to construct the project all at once, which is advantageous for a number of reasons, the parties understood that Black Hills Sports would obtain private financing to pay the balance of the construction costs and the loan would be repaid in part by the CIP Funds that become available in later years. The City opened bids and the City Council awarded the project to MAC Construction on June 15th. Black Hills Sports has obtained a commitment for financing through a participation loan among several local financial institutions in the amount of $1,800,000. This money will be used to pay for part of the construction costs incurred in 2020 and 2021 and any additional costs which may be incurred above the amount budgeted by the City. In order to finalize this loan, the banks want a commitment from the City that the monies previously allocated for this project can be assigned to help repay the loan. The banks and Black Hills Sports understand that the City’s maximum contribution to this project is the $5 million which is currently budgeted. The banks and Black Hills Sports further understand that if the amount the City has budgeted for this project is insufficient to repay the entire loan, Black Hills Sports is solely responsible for repaying any remaining balance.
Funding Source & Fiscal Impact (if applicable):
| Funding | Cost Center |
|---|---|
| This obligation will be paid out of CIP and Vision Funds previously committed to this project. | |
Recommendations:
Origination Recommendation Action:
Approve
Origination Recommendation Notes:
We are still working out the details of the specific documents. I anticipate they will be ready early next week. As soon as they are ready I will forward them to the Council and have them linked to the agenda.
City Council Options:
If you with hold the authorization to execute these documents it will likely impede the ability of Black Hills Sports to get a gap loan and will almost certainly delay or possibly kill the project.