Title: BCEC Context, Convention Center Financing and BCEC Westin Hotel Presentation to The Convention Partnership
1BCEC Context, Convention Center Financing
andBCEC Westin HotelPresentation toThe
Convention Partnership
- Presented by Kairos Shen, BRA
- Frederick Peterson, MCCA
- Johanna Storella, MCCA
- James Sult, Piper Jaffray Co.
- Howard Davis, MCCA
- May 24, 2010
2Agenda
- Community Context
- BRAs Vision for the South Boston Seaport
District, - Existing/Proposed Development Plans and Land
Ownership - Transportation Plans/Future Considerations
- South Boston and Fort Point Neighborhoods
- BCEC Financing Case Study
- Overview Financing for Other Convention Center
Expansions - BCEC Westin Hotel Case Study
3Community Context Kairos Shen, Chief Planner,
BRA Fred Peterson, Director of Facilities
Operations, MCCA
4MCCA and Community Dialogue
- Objectives
- Begin the process of jointly identifying
neighborhood community concerns - Work together to explore potential solutions
- Respect existing uses in the area and how any
expansion weaves into the fabric of the community - Planning Documents
- Seaport Public Realm Plan
- BRA 100 Acre Plan
- City of Boston/ BRA Crossroads Initiative
- Current zoning in and around BCEC
- BRA East/West First Street planning rezoning
efforts
5Community Concerns What Weve Heard
- Design
- Campus-style
- Appropriate aesthetic
- Height scale massing finishes
- Open Space
- Types of uses
- Onsite location(s)
- Connectivity to surrounding areas (e.g. 100
acres) - Pedestrian Impact
- Access
- Connections to neighborhoods and waterfront
- Streetscape improvements
- Traffic calming elements
6Community Concerns What Weve Heard
- Transportation
- MBTA
- D Street/Summer Street or on-site service
- Silver Line
- CSX Track 61 uses
- Cypher St connection from A St to Pappas Way
- Pedestrian connections vehicular uses
- Blue Highway water ferries shuttles
- Parking Marshalling
- Locations, structures and loading docks
- Shuttles trucks servicing each building
- South Boston Bypass Road
- Spanning over the roadway
- Current future uses (Hazmat truck route)
7BCEC Financing Case Study Johanna
Storella Chief Financial Officer, MCCA
8BCEC Construction and Financing
- Project Funded at State and Local Level
- Commonwealth Responsibilities
- Chapter 152 authorized the Commonwealth to issue
694.4 million in special obligation bonds to
cover Boston, Springfield and Worcester projects - Convention Center Fund established to secure and
provide payment of State bonds - City of Boston Responsibilities
- Under Chapter 152, City required to provide not
less than 157.8 million for BCEC site
acquisition and preparation - Chapter 152 also authorized the City to issue
bonds to fund this obligation, and to increase
the room occupancy tax to pay bond debt service - Funding plan designed to place the tax burden on
the visitors rather than the citizens of the
Commonwealth
9Site Acquisition Site Preparation Funding
10BCEC Project Funding
11Chapter 152 Convention Center Fund Revenue
Sources
- Convention Center Fund
- Convention Center Financing Fee, 2.75 of the
total room rent - Commonwealths existing 5.7 hotel room occupancy
tax - Current hotel rooms located in BCCFD
- New hotel rooms located in Boston or Cambridge
- New hotel rooms located in the SCCFD
- Springfields 4 local hotel room occupancy tax
for new rooms in the SCCFD - Commonwealths existing 5 tax upon sales at new
retail shops in BCCFD and SCCFD - 5 surcharge on the ticket price for any land or
water based tour in Boston - States share of the vehicular rental surcharge,
9 - 2 per day surcharge on parking at any facility
constructed as part of the Boston, Springfield or
Worcester projects
12Chapter 152 City of Boston New Revenue Sources
- Anticipated 4 local option room occupancy excise
tax on new hotel rooms - Sale of 260 hackney licenses
- Citys share of the vehicular rental surcharge,
1
13Flow of FundsConvention Center Fund FY 2009
14Distribution of FundsConvention Center Fund
FY 2009
8.9
43.7
16.3
12.3
11.3
5.2
62.5
16.6
23.2
Example Fiscal Year 2009
15Overview Financing for Other Convention Center
Expansions James Sult, Piper Jaffray Company
16CAPITAL FUNDING SOURCES
- Hotel and FB Related
- Taxes
-
- Broad Base Occupancy
- Tax
- Occupancy Tax on New
- Hotels
-
- Flat Fee per Occupied
- Room
- Broad Base FB Tax
- Target District FB Tax
- Other Tourism Related Taxes
- Rental Car Surcharge
- Taxicab Fees
- Tourist Activity
- Surcharge
- Direct Government Support
- Broad Base Sales Tax
- Pledge
- State Debt Obligation (GO)
- City Debt Obligation
17PHOENIX CONVENTION CENTER
- Ownership / Operations
- Owned and operated by City
- Operating Funding Sources
- Operating revenues
- Operating deficit funded from City Excise Tax
Fund - Capital Financing Structure (Expansion)
- 300,000,000 State contribution
- Issuance of State backed bonds
- 300,000,000 City issued bonds
- Backed by pledge of Citywide excise taxes
- Facility (expanded)
- Original facility opened in 1969
- Expansion completed in December 2008
- 502,500 SF of exhibition space
- 150,000 SF of flexible meeting space
- Three ballrooms totaling 119,000 SF
18SAN DIEGO CONVENTION CENTER
- Ownership / Operations
- Owned by City
- Operated by San Diego Convention Center
Corporation (City controlled) - Land owned by San Diego Unified Port Authority
(ground lease to City) - Operating Funding Sources
- Operating revenues
- Operating deficit funded from City General Fund
- Capital Financing Structure
- (Expansion)
- 205,000,000 Lease Revenue Bonds issued by
Convention Center Expansion Authority - Backed by annual City lease payments
- 4,500,000 annual debt service support payment
from Port to City for 20 years
- Facility (expanded)
- Original facility opened in 1989
- Expansion completed in 1998
- 615,701 SF of exhibition space
- 204,114 SF of flexible meeting space
- Further expansion and new hotel under
consideration
19PENNSYLVANIA CONVENTION CENTER
- Ownership / Operations
- Owned and operated by the Pennsylvania Convention
Center Authority - Authority is a component unit of the City of
Philadelphia - Land owned by City (ground lease to Authority)
- Operating Funding Sources
- Operating revenues
- Authority receives approximately 70 of a 6
City-wide hotel occupancy tax - Capital Financing Structure (Original)
- 277,195,000 Lease Revenue Bonds issued by the
Authority - Backed by annual City lease payments equal to
debt service - City and State grants
- State - 185 million
- City - 42 million
- Expansion primarily funded by the State
- Facility (expanded)
- Original facility broke ground in 1993
- Expansion expected completion
- March 2011
- 700,001 SF of exhibition space
- 246,000 SF of meeting space
- 60,000 SF ballroom (92,000 SF total)
20WASHINGTON DC CONVENTION CENTER
- Ownership / Operations
- Owned and operated by the Washington Convention
Center Authority - Independent authority of the District government
- Operating Funding Sources
- Operating revenues
- 4.45 district-wide hotel occupancy tax
- 1 district-wide FB tax
- 1 tax on vehicle rentals
- Capital Financing Structure
- 524,460,000 Dedicated Tax Revenue Bonds issued
by the Authority in 1998 - Backed by revenues described above
- Facility
- Opened March 2003
- 725,000 SF of exhibition space
- 250,000 SF of meeting space
- 52,000 SF ballroom
21Capital Funding Sources by City
22OWNERSHIP AND OPERATIONS
Ownership
Operations Funding
- Independent Authority (State)
- Boston
- Atlanta
- Chicago
- New Orleans
- Independent Authority (City)
- Philadelphia
- Washington DC
- Las Vegas (Clark County)
- City Controlled
- San Diego
- San Francisco
- Phoenix
- Dallas
- Denver
- Orlando (Orange County)
- Dedicated Tax Revenues (operations)
- Boston
- Philadelphia
- Washington DC
- New Orleans
- Dallas
- Direct City Funding (operations)
- Phoenix
- San Diego
- San Francisco
- Dallas (shortfalls)
- Las Vegas (room tax revenues)
- Denver
23BCEC Westin Hotel Case Study Howard
Davis Director of Capital Projects, MCCA
24RFP to Groundbreaking 5 years
- 1999
- RFP Issued
- 2000 2002
- Development Agreement and Lease Signed
- Starwood/Carpenter Company
- Design and Permitting
- 2003
- New Developers
- New Design Two Phases
- 2004
- Groundbreaking
25Since 2004 Groundbreaking
- 2006
- Westin Opens for Business
- 2007
- Hotel Sold - 302 Million
- Present
- Operations Successful
- No Firm Expansion Plans
26Hotel Rent
- Base Rent
- Fixed Schedule
- Commences 2013
- Percentage Rent
- of Gross Revenue
- Transaction Rent
- of Sales/Refinancing Proceeds
- Approximately 1 Million to MCCA from 2007 Sale
27Room Block Agreement
- Blocks of Rooms Available to MCCA
- At Not-to-Exceed Rates
- of Available Rooms
- Function of How Far in Advance Rooms are Booked
- 48 Months and Beyond 75 Rooms
- Less than 12 Months 0 Rooms
28MCCA/Westin Relationship
29Original Capital Structure
- 121,000,000 Private -1st Mortgage Debt
- 49,000,000 Private - Developer/Tenant Equity
- 170,000,000 Total Private Sources
-
- 18,000,000 MCCA Infrastructure, Etc.
- 15,000,000 Public HUD Loan City of Boston
- 33,000,000 Total Public Sources
- 203,000,000 Total All Sources
30Enhanced Investor Returns
- Favorable Ground Lease from MCCA
- No Annual Rent Payments for 7 years
- Structured Property Taxes City of Boston
31Conclusions BCEC Westin Hotel
- Hotel Was Needed and Successfully Developed
- 7 Year Process
- Not Feasible Without Public Contributions
- Approximately 33 million 16 of Total
- Today, Required Public Contribution Much Higher
- In Washington, D.C., Approximately 50
- Hotel Sold Within Year of Opening
- Very Significant Profit for Developer