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Agenda 03/28/2017 Item #11A03/28/2017 EXECUTIVE SUMMARY Recommendation to evaluate the financing plan associated with developing a regional tournament caliber sports facility and to provide guidance on future actions. OBJECTIVE: To comply with prior Board direction for an evaluation of the financing plan associated with the development of a regional tournament caliber sports facility and seek direction for the County Manager to either proceed with the project or terminate the process. CONSIDERATIONS: On February 28, 2017, under item 11C, the Board considered the concept of developing a regional tournament caliber sports facility. Staff identified two locations that could support a facility of this type and also identified a third location that may also be suitable. The review was generally positive with respect to the concept of the facility. The Board also suggested that staff consider scenarios for potentially co -locating the project with phasing. The item was presented with the premise that the Board would express a consensus, as a super majority, that they would be willing to fund such an endeavor. The preliminary funding plan was developed with the concept of a 1% increase in the Tourist Development Tax (TDT). The enactment of the fifth penny of TDT is expected to generate approximately $5,200,000 annually. The project is estimated to cost between $60,000,000 and $100,000,000 depending on the final land cost, amenities selected, final design, permitting, and construction values at the time the project is bid. The Board expressed an interes t in proceeding with the project subject to having a viable financing plan. As such, the Board requested that staff prepare a more detailed financing plan clearly identifying that the project was financially viable using the additional TDT revenue. It was also suggested that the financing plan should be vetted with the Tourist Development Council (TDC) prior to coming back to the Board. The TDC comments will be presented by memorandum or verbally, as the meeting will have been held after the publishing of this agenda item During the deliberations it was also pointed out that the facility could be used for local sports teams during times when tournament play was not scheduled. Subsequent to the Board meeting, the question was raised as to how the local usage would participate in financially supporting the project. For clarification, it was always staff’s intent to include partial financial support for the facility from local funds. Local teams would pay league fees and rental fees for the facilities. Additionally, staff anticipated following the same financial model as other jurisdictions where a proportionate share of the operation and maintenance costs are covered by ad valorem revenues similar to other public venues in Collier County. Finally, the Office of Budget and Management worked with outside bond counsel and developed a financing plan using two scenarios at $60,000,000 and two scenarios at $80,000,000. No scenarios were developed at $100,000,000 as the 1% TDT pledge would not support the financing. Project costs above these financing scenarios would require an up-front buy-down to meet the financing limits. Staff would not recommend a project outlay where the land costs would force the project to exceed $80,000,000. FISCAL IMPACT: Pursuing an amateur sports complex will require the addition of a statutorily authorized fifth penny of TDT tax in order to offset anticipated debt service of 03/28/2017 between $4 million and $6 million annually and preserve some semblance of dollar distribution to the various user beneficiaries similar to that currently enjoyed under the four penny structure. The following table and graph illustrates annual debt service at issues of $60 million and $80 million over 20 or 25 years. A fifth penny is required for the following reasons; 1. Protect cash flow and preserve distribution of dollars to current programs and services 2. Protect credit on the debt issued by maximizing Maximum Annual Debt Service (MADS) coverage If a fifth penny were not enacted and payment of debt service under bond covenants assumes a priority position in the distribution of tourist taxes, dollar distribution to programs such as beach re-nourishment; marketing; and museums will be greatly reduced. Imagine removing between $4 million and $6 million from available dollars currently funding beach re-nourishment or 03/28/2017 marketing. Now, the introduction of a non TDT revenue source is an option without increasing the TDT tax, but this approach significantly reduces budget certainty through subjectivity to the annual appropriation process and competition for available resources with priority capital and operating programs. From a policy and sequencing perspective, decisions on adding the fifth penny to the TDT structure and revising the current TDT ordinance will be necessary prior to beginning the credit process. Should a policy decision be made not to add the fifth penny as part of a revision to the TDT ordinance, then a policy decision could be made to continue with any ordinance revisions with the goal of adjusting the distribution formulas. GROWTH MANAGEMENT IMPACT: The development of sports facilities does not conflict with Growth Management Plan. LEGAL CONSIDERATIONS: This item has been approved as to form and legality and requires a majority vote for Board approval. -JAK RECOMMENDATION: That the Board of County Commissioners reviews the financial information provided, reaffirms their interest in developing a regional tournament caliber sports facility, and directs the County Manager or his designees to continue to: 1. Develop comparative conceptual site development plans, development schedules, cost analysis, and financing plans for the viable sites and report back to the Board within 120 days; 2. Negotiate with the owners of City Gate and the Golden Gate Golf Course a final and best price for the land and non-monetary exchanges; and 3. Authorize the expenditure of up to $50,000 for additional consultant services. Alternatively, direct staff to terminate the search for a regional sports complex should a supe r majority of the Board not support the concept. Prepared by: Nick Casalanguida, Deputy County Manager; and Mark Isackson, Corporate Financial and Management Services Division Director ATTACHMENT(S) 1. Item 11C Pages from 20170228BCCAgendaPacket (PDF) 2. Sports Facilities Presentation 2-28-17 (PDF) 03/28/2017 COLLIER COUNTY Board of County Commissioners Item Number: 11.A Doc ID: 2928 Item Summary: Recommendation to evaluate the financing plan associated with developing a regional tournament caliber sports facility and to provide guidance on future actions. (Mark Isackson, Corporate Financial and Management Services Division Director) Meeting Date: 03/28/2017 Prepared by: Title: Executive Secretary to County Manager – County Manager's Office Name: MaryJo Brock 03/20/2017 12:55 PM Submitted by: Title: County Manager – County Manager's Office Name: Leo E. Ochs 03/20/2017 12:55 PM Approved By: Review: County Attorney's Office Scott Teach Level 2 Attorney Review Completed 03/20/2017 2:17 PM Office of Management and Budget MaryJo Brock Level 3 OMB Gatekeeper Review Skipped 03/20/2017 12:50 PM County Attorney's Office MaryJo Brock Level 3 County Attorney's Office Review Skipped 03/20/2017 12:50 PM County Manager's Office Nick Casalanguida Level 4 County Manager Review Completed 03/20/2017 4:06 PM Board of County Commissioners MaryJo Brock Meeting Pending 03/28/2017 9:00 AM splinji I Ad.W.. t.. 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Ma L MMMML-- City Gate CC305 -W- VV.fy.i Beck 8LV�--' L- v —.— 7 - of CITY GATE BOULFVARD IgaRT44 9 D ❑ 0 n D �!—P D ❑ —9 D iTF ft0fJLffV*AO NORTH %Cr FROWT VARD SETWX too—..— FEkOHOY!nJi lu 9 0 0 0 0 D Lfl D *fflok a LOCANKIN ---%.32AC 1-15ACK 2&Q,SoEVARA S9Mj;Ck �1 FM��Pflflm G F F Recommendation 1. develop a financing plan with options that would support the facility and report back to the Board within 120 days; 2. negotiate with the owners of city Gate a final and best price for the land and non -monetary exchanges and bring back the outcome with the financing plan; 3. deliver a final comparison of price and time comparing city Gate and CC305; and 4. authorize the expenditure of up to $50,000 for additional consultant services.