City Council approves ballpark finance plan that includes $12 million from team owners

El Paso City Council approved a new ballpark financing plan Tuesday, which adds to the city’s debt and accepts millions of dollars from the team’s ownership group.

City representatives Emma Acosta, Eddie Holguin, and Carl Robinson voted against the new plan. City representatives Ann Morgan Lilly, Susie Byrd, Steve Ortega, Cortney Niland, and Dr. Michiel Noe voted for the new financing plan.

The council decided on Tuesday to increase by $8 million the amount of debt they issue for the construction of the ballpark from $52.8 million to $60.8 million. The city said tax-payers will not pay for that debt because $48.7 million is going to come from the hotel occupancy tax visitors pay when they stay in El Paso hotels and $12.1 million will be paid by MountainStar Sports Group over the 30-year lease of the baseball stadium.

MountainStar Sports Group is the ownership group that will be relocating the Triple-A Tucson Padres to El Paso. The ballpark is being built on the site of the old City Hall with the goal of being ready for the 2014 season.

The $12.1 million MountainStar has committed to contributing would be secured by doubling their lease payments to the city to occupy the stadium, from $200,000 to $400,000 a year. Mountain Star’s rent to the city will also increase by 10 percent every five years.

They’ve also agreed to extend the term of MountainStar’s lease and non-relocation agreement from 25 to 30 years.

The main concern for the council members who opposed the plan was that adding more debt will increase the amount the city has to pay in interest over the span of the stadium lease. The city’s Chief Financial Officer, Carmen Arrieta-Candelaria said the $8 million over the 30-year lease will add $23 million in interest to the projects overall budget.

“Why doesn’t MountainStar Sports group pay for these amenities up front to avoid the issuance of additional debt?” asked Acosta several times during the meeting. City Manager Joyce Wilson said having two financing plans would complicate the project, especially because MountainStar Sports Group, as a corporation, must get shorter-term loans than the City.

“I can totally see why the ownership group is not coming up with $12 million. It doesn’t make any sense. In today’s interest rate environment, if you can earn 8% on your money but you can partner with someone who can issue debt at 2%, would you not do that? Yeah you would. This is a true public/private partnership,” said City Rep. Cortney Niland.

MoutainStar owner Josh Hunt said the city committed to building the stadium and MountainStar is contributing to the ballpark construction budget so that no amenities will be cut, including party decks, a bullpen bar, a team store, water features and a fourth level of suites, premium seats and a press area.

“The city’s got the lowest cost at capital and to keep this project on schedule and on time, we’re willing to increase our rent. We’ll be in this close to $50 million both in purchase price (for the team) and lease payments over the term of the lease. We’ve always had the community hat on, not the business hat,” said Hunt.

Supporters said this plan will make more money than the city will have to pay in interest. That’s because the sales tax made at the ballpark won’t have to be used to pay back its construction as originally planned, and can go straight into the city’s general fund.

City officials said that over the 30-year lease of the ballpark, they estimate an excess in revenue from those sales taxes, ticket surcharges and even rent from MountainStar – that will total $27 million, more than the $23 million in added interest the city will pay for the new debt.

City Rep. Eddie Holguin said that is based on projections that could change.

Before the vote Holguinasked to postpone the ballpark item, so that the newly-elected city council could decide the critical vote and not the current council.Tuesday was the last meeting for City Representative Susie Byrd, defeated mayoral candidate Steve Ortega and Mayor John Cook. That proposal failed with Holguin, Acosta, and Robinson voting to postpone and everyone else voting no.

Holguin then asked if anything prevented him from bringing up the issue in two weeks and city attorneys said nothing could prevent him from doing so.