Mayor & Commission Meetings

TENTATIVE AGENDA JOINT MEETING WITH MAYOR AND COMMISSION, CLASSIC CENTER AUTHORITY, AND BOND OVERSIGHT COMMITTEE THURSDAY, AUGUST 29, 2024, 5:30 P.M. 120 WEST DOUGHJERTY STREET A. Welcome and call to order Mayor Kelly Girtz B. Classic Center arena development update C. Adjourn A qualified interpreter for the hearing impaired is available upon request at least 10 days in advance of this meeting. Please call (706) 613-3031 (TDD {706} 613-3115) to request an interpreter or for more information. AUGUST 29, 2024 AGENDA • Purpose • History • Facts and Issues • Financials • Remaining Questions • The way forward PURPOSE • Provide factual information about the terminated development contract • Review existing bonds and ability to pay back • Share The Classic Center Authority’s plan to move forward and its efforts to advance this project THE DEVELOPMENT HAS FUNDAMENTALLY SHIFTED 1300 Space Parking Deck 300+ New Hotel Rooms Housing/residential Unique Retail Improved Transit Enhanced Utilities Entertainment District Connecting our Community  THE DEVELOPMENT HAS FUNDAMENTALLY SHIFTED • CCA with commission-assigned committee -issued bid to find a master developer in May 2022 • Letter of Intent drafted in Nov. 2022 • Brought on Commercial Real Estate Attorney in Feb. 2023 and finalized LOI • Contracts were signed, enabling them to move forward with phase 1 – hotel and parking deck • Authority issued more time as requested by developer, a total of 8 times Feb. – Oct. 2023 • Developer terminated between the third and fourth amendment on July 7th 2023 • The Authority reinstated August 8th 2023 • In Oct. of 2023, Developer, rather than close, requested a ONE-year extension; the Authority agreed, and the 9th Amendment was executed, but the Authority required a few claw-back provisions: • Monthly nonrefundable earnest money; as the delay cost the Authority • Assignment of predevelopment materials if unable to close • The Authority made it clear that we would not extend again, and if they were unable to close, we would need to go back to market • Developer defaulted on Contract on July 1, 2024 by failing to deliver the July Earnest Money payment.  CLASSIC CENTER PARKING REVENUE EVALUATION 7OO EVENTS PER SPACE MONTHLY FY24 TOTAL REVENUE REVENUE 6 SOLD OUT FOOTBALL $1.6M GAMES $138 50% AVG OCCUPANCY *7OO Total Spaces PROVIDENT REVENUE REQUIREMENTS YEARLY AVERAGE 359 TRANSIENT PARKING DAYS PER SPACE AVERAGE REVENUE 125 CC EVENT DAYS MONTHLY REVENUE 115 ARENA EVENT DAYS $5.4M 6 SOLD OUT FOOTBAL GAMES $347 *No Hotel in Year One 100% HOTEL OCCUPANCY *1300 Total Spaces 85% AVG OVERALL OCCUPANCY Based on the Provident Model requirements and multiple projection evaluations, we did not see a solution to guarantee the revenue requirements and a way forward. THE DEVELOPMENT HAS FUNDAMENTALLY SHIFTED • Developer shifted the risk of the development from them to the Authority • Developer brought in Provident in February 2024 due to inability to close as planned • By May 2024 the deal had shifted to Provident requiring a Master Lessor – CCA • In June 2024 our team explored their projections to see if we could accommodate it • Their projections would not work as they presented and would put CCA and ACC further in financial risk • Still trying to help, we asked to explore a smaller deck, looking only at what is needed for phase 1 • We explained that even if we could get this to work with a smaller deck, it would require a new RFP process • The developer then defaulted on our agreement by not paying their agreed upon earnest money as they could not close by the October date • The Authority issued a notice of default and provided time to cure • The developer then asked for a mutual termination HISTORY OF HOCKEY • 2.20.2021 – Jerry James provides notice of intent letter on behalf of R & J Sports LLC • 7.15.2021 – Signed letter of intent from Jerry James. • 11.6.2021 - Signed contract from Jerry James, R & J Sports LLC for ECHL franchise • 10.18.2022 – Atlanta Gladiator announce sale of team and new ownership group. Link • 11.22.2022 – Todd Mackin of Spire Sports inquires about bringing ECHL team to Arena • 3.7.2023 – Spire Sports informs us that Atlanta will not give permission to bring ECHL into territory • March 2023 – We enter talks with UGA Athletics about modifying Arena to fit UGA Basketball • 4.20.2023 – We reengage with Spire Sports about bringing pro hockey to Athens • 4.21.2023 – UGA officially moves forward with refurbishment of Stegman Coliseum • 10.19.2023 – Todd Mackin signs contract on behalf of Spire Hockey LLC • 2.21. 2024 – Todd Mackin signs amended contract on behalf of Athens Hockey LLC To be clear, the development contract did not reference or require a hockey tenant as a pre-condition of closing Reminder: We had a professional study from CSL which projected number of events the Arena would see. That study could be used for financing. Much like a hotel and or parking study would be used for financing purposes. FACTS & ISSUES IN SUMMARY • Developer caused a significant delay by requesting 9 amendments. • Ultimately didn’t do what they contracted to do. • This caused the Authority to pay bonds that should have been paid with rent from land. • When we attempted to get predevelopment documents, we discovered the Architect and Engineers had not been paid (as of 8.21.2024) • CCA legal counsel advised us if we wanted to consider the Provident Financial model, we would need to go back out for bid. FINANCIAL OVERVIEW ORIGINAL PROJECT BUDGET $87 Million CURRENT PROJECT BUDGET $151 Million EXTERNAL FACTORS • From SPLOST $33,320,000 22% 1. COVID Supply Chain issues • From Bonds $107,235,429 71% 2. Construction Escalation • From TCCA $ 10,916,675 7% 3. Rock 4. Environmental Site Mitigation • Project Total $151,472,104 100% BONDS 1 - 5 Breakdown of Bonds Interest Annual Payment Original Amount Capitalized Interest Project Fund Rate (FY27 as Example) 2021 Series Bond 53,221,606.54 3,796,496.08 49,425,110.46 2.88% 2,377,750.00 2022A Series Bond 24,093,280.37 2,591,664.69 21,501,615.68 4.48% 1,072,906.00 2022B Series Bond 11,790,753.06 1,289,430.11 10,501,322.95 5.09% 643,614.00 2023A Series Bond 15,166,451.91 972,285.03 14,194,166.88 4.46% 717,112.00 2023B Series Bond 12,583,415.11 970,201.79 11,613,213.32 5.70% 1,695,960.00 116,855,506.99 9,620,077.70 107,235,429.29 3.94% 6,507,342.00  Originally Planned Revenue Streams for Bond Payments 2021 Bond New Parking Revenue 450,000.00 Current Projected Revenue Streams for Bond Payments Annual Portion of Hotel Tax on New Rooms 410,432.00 Hotel Tax increase from Arena Events 862,072.00 Annual Collection on Online Platforms Hotel Tax 440,000.00 Ticket Fees 860,000.00 Catering Agreement 200,000.00 Naming Rights Agreement 510,000.00 Ticket Fee From Arena Events 275,000.00 Excess Sponsors/Suites 300,000.00 Arena Pro Forma Net Income 505,000.00 Arena Fundraising Campaign 100,000.00 CCA Parking 500,000.00 Short-Term Rental Hotel Tax (AirBNB) 750,000.00 2022A&B Bonds Catering Commissions 420,000.00 Annual Payment for the Senior Condo Land & Arena Net Income 1,000,000.00 Parking 200,000.00 Annual Payment for Land Lease of - Hotel 300,000.00 Land Lease 700,000.00 Condo Hotel - Auto Bridge 200,000.00 CCA Contribution 557,270.00 Convention Center Annual 100,000.00 Special Tax District 48,000.00 Naming Rights Agreement 475,000.00 Total Projected Revenue for Bond Payments - Using Hotel Tax Increment 200,000.00 FY27 Payments as Example 6,507,342.00 Special Tax District 280,000.00 Ticket Tax 150,000.00 2023A&B Bonds Arena Pro Forma Net Reveunes 1,039,410.00 South Club Naming Rights 170,000.00 Premium Lift 127,500.00 Additional Ticket Tax 385,000.00 CCA Parking Deck Revenue 500,000.00 Total Originally Planned Revenue Streams for Bond Payments 6,507,342.00  Bond Debt Service Fund Balance - Detailed Analysis of Revenue Streams Nov 2024 May 2025 Nov 2025 May 2026 Nov 2026 May 2027 Debt Service Fund - Beginning Balance 747,175.15 398,477.80 654,704.12 1,639,480.93 805,954.40 1,642,454.52 Hotel Tax increase from Arena Events 50,000.00 100,000.00 248,211.74 322,317.60 431,036.00 431,036.00 Ticket Fees - 337,500.00 430,000.00 430,000.00 430,000.00 430,000.00 Naming Rights Agreement 85,000.00 255,000.00 255,000.00 255,000.00 255,000.00 255,000.00 Excess Sponsors/Suites - 75,000.00 150,000.00 150,000.00 150,000.00 150,000.00 CCA Parking 250,000.00 250,000.00 250,000.00 250,000.00 250,000.00 Short-Term Rental Hotel Tax (AirBNB) 210,000.00 375,000.00 375,000.00 375,000.00 375,000.00 375,000.00 Catering Commissions - 114,583.35 210,000.00 210,000.00 210,000.00 210,000.00 Arena Net Income - 246,254.15 500,000.00 500,000.00 500,000.00 500,000.00 Land Lease - - - - 350,000.00 350,000.00 CCA Contribution 25,000.00 50,000.00 260,135.00 260,135.00 260,135.00 278,635.00 Special Tax District - - - 4,000.00 24,000.00 24,000.00 Bond Payment Due (718,697.35) (1,547,111.18) (1,693,569.93) (3,589,979.13) (2,398,670.88) (4,108,670.88) Debt Service Fund - Ending Balance 398,477.80 654,704.12 1,639,480.93 805,954.40 1,642,454.52 787,454.64  THE PLAN A WAY FORWARD FOR THE FUTURE CBRE – Coldwell Banker Richard Ellis Arguably the largest commercial real-estate broker in the world THIRD HOTEL STUDY – Began August 26, 2024 CBRE PARTNERSHIP – Begins September 1, 2024 GO TO MARKET WITH RFP – Begins October 2024 • New Development partner(s) • And a financing partner(s)- (like Provident) SELECT NEW DEVELOPMENT PARTNER(s) – January 2025 CLOSE NEW DEVELOPMENT PARTNER – July 2025 THE CLASSIC CENTER AUTHORITY IS INVESTED • Conducted 3 hotel studies $60k • Installed electricity to the arena $1.1 million • Installed solar panels to the roof $285k • Hired attorneys $625k • Contributed $5 million directly to the Arena • Secured partners to contribute $4.4 million • Earned total interest to pay $1.5 million • Conducted title history search $46k • Hired Engineering firm and worked with EPD so we can develop on property $151k • Hired Terracon so we can pursue TIFIA $38k • Hired a lobbyist to secure $2.7 million for MHOF – $232k • Conducted a Traffic Study $25k • Hired additional staff prior to Arena opening - $135k • Grand Total - $13,597,000 YOUR AUTHORITY IS EXCEEDING EXECTATIONS • Covering Bond Payments through FY27 – Have already paid $1,591,986 to date – Will pay an additional $14,056,699 through FY27 – Total of $15,648,685 in Bond Payments thru FY27 • Partnership/Premium Seating Agreements to Date – $2,510,453 actual sales to date against a budget of $2,500,000 – Naming Rights and Founding $600,000 – Beverage $200,000 per year – Bank $300,000 per year – Suite and Premium Seating revenue of $1,038,000 per year – Value of team revenue $200,000 per year For nearly 30 years, The Classic Center Authority has been an excellent partner and one you can trust. With your leadership, two oversight boards, and an outstanding staff committed to the mission and to this community, the Authority is the right partner to move this project to completion. The developer was unable to secure financing by October. Ultimately, t h e d e v e l o p e r t h e n d e f a u l t e d o n t h e 9 th a m e n d m e n t t o t h e d e v e l o p m e n t contract. The Classic Center will continue to pay the bonds until a new development partner is secured. The Classic Center and CBRE will secure a new development partner. THANK YOU