City will save $6.4 million on ballpark; still must subsidize through general fund

The City of El Paso is slated to save about $6.4 million on the ballpark after the City Council voted to refinance a large part of the debt at a lower interest rate.

The City originally financed the $153 million debt with a 5.5% interest rate until the year 2043. But on Monday the City Council, acting as the Downtown Development Corporation, approved a motion to attempt to refinance the debt at a 4.0% interest rate, which could potentially bring the total amount down to $147 million.

The council’s motion capped the interest rate at 5% but city officials hope the refinancing deal will be closer to 4%. The move is also meant to avoid a $17 million balloon payment due in 2023 that was part of the original financing package

City officials have been looking for opportunities to refinance in part because of the unfavorable financing deal they settled for in 2013 when the total cost of the ballpark increased about $27 million after the City sold the bonds at a turbulent time in the market with higher interest rates.

Due to the unfavorable financing, the city has had to subsidize the ballpark debt payments through its general fund which is used for every day operations of the city. In fiscal year 2014, the annual ballpark debt payment was $4.1 million but the ballpark created only $3.1 million in revenue for the city through sales and hotel occupancy taxes (H.O.T.), tickets, rent payments from MountainStar Sports Group and parking. That left the city with a $977,238 shortfall, which it funded through its general fund.

Fiscal year 2015 faired a lot better because of the U.S. Bowling Congress championship tournament which brought tens of thousands of visitors to El Paso and raised extra revenue in H.O.T. and sales tax revenues. That year, the City used $256,214 from the general fund to subsidize the ballpark debt payment, a significantly smaller amount than the prior year.

For fiscal year 2016, the City is projecting to subsidize the ballpark debt payment with $484,937 from the general fund. The subsidies are expected to continue until 2023, according to the City’s Chief Financial Officer Mark Sutter. He said the subsidies should decrease every year.

City Rep. Cortney Niland on Monday said she expected the city to “break even” on the ballpark debt payments much sooner than Sutter forecasted. She credits new downtown development, such as three new hotels and several bars and entertainment establishments – spurred by the ballpark – for bringing in at least $400,000 in new taxing revenue for the City. She said that new revenue could cover the subsidy.

Sutter said H.O.T. Tax revenue was bringing in more money than expected, but cautioned council from expecting the subsidy to disappear before 2023.