Challenges lie ahead for Hammons, city

Developer John Q. Hammons has sizable hoops to jump through before taxable bonds will be issued to fund construction of a baseball arena and other projects in the developer agreement for Jordan Valley Park.

Approved unanimously without discussion by City Council at its March 5 meeting, the developer agreement also provides a sizable hoop for the city to jump through. It must come up with funding by May 11 to provide some of the parking, or the whole deal could crash.

Mayor Lee Gannaway and others spent a day in Jefferson City a few weeks ago lobbying local legislators to make sure the city gets state Tax Increment Financing monies of half the state sales tax revenues generated in the TIF district.

"There were warm feelings all around," Gannaway said. "There was good support from our legislators." He added that he believes a decision on the TIF monies is about "two weeks away."

If TIF monies aren't approved, there are about $3 million of investment tax credit available, he said.

As for the Hammonses, before the taxable bonds are issued, they are required to provide a 10-year pro forma operating statement for the trade center, the baseball stadium and the new exposition center showing projected income and expenses for each before bonds will be issued. The taxable leasehold revenue bonds to finance construction are to be repaid by the Hammonses from revenues generated from the stadium, trade center and expo space.

And there are other conditions that must be met before the bonds are issued for sale. For instance, the city and the developers must agree on design documents complete with plans and specifications for the construction of the stadium and the expo center, and for trade center renovations.

Bond purchase agreements with an underwriter must be in place which comply with all federal and state securities laws, rules and regulations, including Securities and Exchange Commission rules that apply to the offering.

In addition, the Hammonses must prepare a budget of costs for each new construction or renovation project. They must also execute unconditional guaranties to secure the taxable bonds.

For each project there are other specific conditions. Before the funding of renovations for the trade center, the Hammonses must execute a lease to the Springfield Center City Development Corporation, the municipal agency which will issue the bonds. The SCCDC will lease the trade center to the city, which, through an operating agreement with the Hammonses, will lease the center back to the Hammonses.

A warranty deed conveying the parking deck affixed to the trade center also must be executed, as must contracts for the renovation or design-build contracts for that project. None of the projects can exceed its respective budget, according to the developer agreement.

Additionally, a special requirement to issuance of bonds for the stadium project is that all the conditions for the trade center and expo center must be satisfied first.

Before the city will construct surface parking east of Hampton Street near the stadium site, a lease with an AA minor league baseball team must be executed by the Hammonses and that agreement must be assigned as collateral to the city. Hammons has stated publicly that a team will be named soon.

Tax-exempt bonds will be issued to fund parking improvements, including the demolition of the trade center parking deck and construction of a 950-space multilevel garage above the first-floor expo space, according to the agreement.

In exchange for deeding the parking deck to the city, the Hammonses will be forgiven an $800,000 debt they incurred during the development of the University Plaza Hotel, the agreement states. The Urban Development Action Grant obligation arose when the hotel reached a certain level of profit, according to Carl Yates, special counsel to the city and its bond attorney.

Similar requirements of plans, designs, budgets and leases are part of the package before the tax-exempt bonds will be issued, too. In addition, the city will have to acquire some extra land for parking spaces, which might require condemnation proceedings. Those proceedings must be at least in the initial phase, but not necessarily completed. Negotiations to buy land for parking and the baseball stadium must be completed before the bonds are issued.

Once all the taxable bonds are paid in full, the Hammonses have the right to purchase the baseball land and stadium for $1. If they elect not to purchase the land, the city may buy the land for an amount equal to the original purchase price of the land acquired for the baseball stadium plus interest.

The Hammonses will, under the sublease and operating agreement, receive all the revenues from the operation of the expo center, the trade center and the baseball stadium. They receive the right to license all events at all three locations; to make or license all concession and novelty sales; to sell or license all advertising and broadcasting rights to the events; to sell or license to others tickets to events at all three locations; to sell or license the naming rights to the three locations; and to promote events at the sites.

The Hammonses also will have the right to sell alcoholic beverages at the facilities, once a license is granted by the city and state.

In previous discussions with Tony Sansone Jr., a developer from St. Louis who had suggested a similar bond arrangement about a year ago, Sansone was only willing to guarantee the bonds for 18 months, Gannaway said. The Hammonses guarantee the bonds for 25 years.

"I am thrilled for the city and John Q. Hammons," Sansone said of the agreement. "I'm elated that Mr. Hammons has been able to get the necessary approvals to begin the stadium projects and (that's) only good for the entire community."

Sansone is working with the city on another Jordan Valley Park project, a multipurpose facility. Terms for Sansone's project, to be built next to the trade center, are still under negotiation, he said, adding that the facility would be built with both public and private monies. "I'm still waiting for the public monies to come forth."