Historic Triangle Recreational Facilities Authority

City of Williamsburg Agenda Historic Triangle Recreational Facilities Authority Meeting Monday, November 27, 2023 @ 4:00 PM 412 N. Boundary Street, Williamsburg, VA 23185 Page 1. CALL TO ORDER 2. ROLL CALL 3. APPROVAL OF MINUTES 4. BOARD MEMBER ANNOUNCEMENTS 5. REPORTS 5.1. Financial Report 5.2. Executive Director's Report 5.3. Legal report 6. OPEN FORUM 7. CLOSED SESSION 7.1. Closed Session Pursuant to Section 2.2-3711(A)(6) & (26) for Discussion or 3 Consideration of the Investment of Public Funds Where Competition or Bargaining Is Involved, Where, If Made Public Initially, the Financial Interest of the Authority Would Be Adversely Affected; Discussion of the Award of a Public Contract Involving the Expenditure of Public Funds, Including Interviews of Bidders or Offerors, and Discussion of the Terms or Scope of Such Contract, Where Discussion in an Open Session Would Adversely Affect the Bargaining Position or Negotiating Strategy of the Public Body (Design and Cost Review, Financial Plan, Locality Participation). AIS-23-034 - Pdf 7.2. Certification of Closed Session 4 AIS-23-035 - Pdf 8. PUBLIC HEARINGS 9. UNFINISHED BUSINESS 9.1. Consideration and Action Regarding the Proposed Design and Cost of the 5-7 Regional Sports Center - Rick Hibbet, MEB/Clark Nexsen Design Team AIS-23-031 - Pdf 10. NEW BUSINESS 10.1. Consideration and Action Regarding the Proposed Financing Plan for the 8-9 Proposed Regional Sports Center - Andrew Trivette, Chair of the HTRFA AIS-23-032 - Pdf 10.2. Consideration and Action Regarding the Request for Locality Support and 10 - 11 Commitment to the Design, Cost, and Financial Plan for the Proposed Regional Sports Center Project at the Colonial Williamsburg Visitor Center Site Page 1 of 11  AIS-23-033 - Pdf 11. ADJOURNMENT Page 2 of 11 Staff Contact Andrew Trivette, City Manager Agenda Item Wording Closed Session Pursuant to Section 2.2-3711(A)(6) & (26) for Discussion or Consideration of the Investment of Public Funds Where Competition or Bargaining Is Involved, Where, If Made Public Initially, the Financial Interest of the Authority Would Be Adversely Affected; Discussion of the Award of a Public Contract Involving the Expenditure of Public Funds, Including Interviews of Bidders or Offerors, and Discussion of the Terms or Scope of Such Contract, Where Discussion in an Open Session Would Adversely Affect the Bargaining Position or Negotiating Strategy of the Public Body (Design and Cost Review, Financial Plan, Locality Participation). Background Information Public bodies such as the HTRFA are enabled to enter into closed session by Section 2.23711 of the Code of Virginia when specific purposes require. Previous Relevant Action None Staff Recommendation None Page 1 of 1 Page 3 of 11 Staff Contact Andrew Trivette, City Manager Agenda Item Wording Certification of Closed Session Background Information The Authority must certify that the preceding closed session included a discussion of only those items authorized by Virginia Code Section 2.2-3711. Previous Relevant Action None Staff Recommendation None Page 1 of 1 Page 4 of 11 Staff Contact Andrew Trivette, City Manager Agenda Item Wording Consideration and Action Regarding the Proposed Design and Cost of the Regional Sports Center - Rick Hibbet, MEB/Clark Nexsen Design Team Background Information Since 2014, the concept of a regional field house has been under review by our localities. The Williamsburg Hotel & Motel Association (WHMA) has long advocated for this effort as a collection of lodging owners who feel such a complex would improve overnight stays. Numerous studies have been completed at the direction of WHMA, demonstrating the potential positive impacts of a sports facility. Despite the potential positive impact on the region, the project has never advanced due to the financial requirements of acquiring land, facility construction, and long-term operations. The 2018 passage of SB942 provided the Historic Triangle with an additional half percent of sales tax for regional tourism promotion and a half percent for locality use. The City of Williamsburg committed its share of the realized new revenues to an annual grant program to increase tourism products and improve tourism trade inside the City and region. 2019 was the first year of the grant program, and the City received 22 applications, invited 11 of those to proceed with further analysis, and awarded $2,239,153 to seven of those proposals. One such project is the WHMA application for designing and constructing a regional sports facility. Through consideration of the WHMA application, the City has committed design/study funding for each of the last three years and the debt service for one-half of the construction costs of the sports facility until the debt is retired. The City Council is now considering increasing this funding commitment to provide 64 percent of the needed debt service each year. Key Design and Cost Action Steps: The City and the HTRFA identified steps that would allow the project to be methodically planned and concurrently evaluated for success before committing to construction. The following steps have been completed: (1) The Historic Triangle Sports Advisory Committee (HTSAC), comprised of Chief Administrative Officers, appropriate Parks and Recreation staff, tourism staff members, economic development staff, and a representative from WHMA, met to discuss and define the required local programming elements. Such elements included the number and specifications for hard courts, recreation fields, aquatic features, play areas, training elements, therapy spaces, medical service areas, meeting space requirements, and performance venue needs. This step included consultation with the public school divisions and William & Mary to review and provide input on other strategic needs that should be considered part of a regional facility. Page 1 of 3 Page 5 of 11  (2) The City selected a sports tourism consultant and an economist to evaluate the defined local programming schedule for applicability and success in annually drawing sports tourism events to the facility. This initial analysis included direct and indirect revenues, attendance estimates, market competition reviews, and suggested recruitment strategies. (3) HTSAC convened to review contending sites inside the City of Williamsburg for the location of the regional sports facility and rank them in order of preference. This step included consulting with local public school divisions and W&M. Additional HTSAC action items consisted of revising earlier projections for revenue and competitiveness to include analysis of the sites selected in order of preference and developing construction and operational costs for the chosen locations. A final component of this step was creating a partnership agreement outlining each participating entity's roles and the required financial commitments. (4) At the request of the HTRFA and the localities, the General Assembly revised §58.1- 603.2 Code of Virginia to redirect Maintenance of Effort (MoE) funding to the Historic Triangle Recreational Authority, providing a direct and dedicated source of funds for HTRFA operations. (5) The HTRFA successfully negotiated an annual lease for the unused/underused property surrounding the Colonial Williamsburg Visitor Center, resulting in several development sites. The first of these sites will be used to develop the regional sports center, allowing for future development opportunities and expansion of the regional recreational offering. The existing CWF Visitor Center, Woodlands Hotel, Landscape Support Structures, and Woodland Conference Center will not be impacted and will remain. (6) The HTRFA received, evaluated, and selected a qualified, unsolicited Private Public Education Facilities and Infrastructure Act (PPEA) proposal from MEB Construction (Chesapeake). Over the last year, working with MEB, the HTRFA, and its design review committee have evaluated example sports centers, selected sports elements, and refined the design to allow confirmed pricing and completion of 35% of drawings needed for construction. (7) The HTRFA evaluated operating models for municipal sports facilities and solicited responses from operators consistent with the needs of the Historic Triangle. Four qualified responses were received, and the HTRFA interviewed all four. Using this information, the HTRFA advanced to the more formal Request for Proposal (RFP) phase of selection, and as a result, expected operating costs and revenues for the first five years are now defined. The remaining steps include: (8) Approval by each of the three locality's elected bodies for the Memorandum of Agreement (MoA) to establish the financial partnership of the jurisdictions. (9) HTRFA execution of the comprehensive development agreement with MEB, including the Guaranteed Maximum Price (GMP). HTRFA Action Required The MEB/Clark Nexsen design team has been working with the HTRFA and the design committee to develop engineered construction drawings that are 35% of the completed design drawing set needed for construction. With this step complete, the scope of the interim agreement is satisfied. Before the next design step, authorizing construction through the execution of a comprehensive agreement, the HTRFA must receive and approve the design and cost proposal from the design team. Page 2 of 3 Page 6 of 11 Previous Relevant Action September 14, 2022 - HTRFA Selected the MEB and Clark Nexsen Design Team to Proceed with 35% Drawings for a Regional Sports Center at the Colonial Williamsburg Visitor Center Staff Recommendation Staff recommends approval of the design and cost as proposed at the completion of work under the interim agreement with the design team. Page 3 of 3 Page 7 of 11 Staff Contact Andrew Trivette, City Manager Agenda Item Wording Consideration and Action Regarding the Proposed Financing Plan for the Proposed Regional Sports Center - Andrew Trivette, Chair of the HTRFA Background Information The regional sports center project includes two broad cost categories: capital and operating. Sports Center Fiscal Analysis: The City contracted with Victus Advisors to update and verify the results of the previous field house study completed by Sports Facility Advisors. Additionally, the City contracted with HVS Convention, Sports & Entertainment Facilities Consulting (HVS) to independently evaluate the Victus Advisors' assumptions and complete a more robust economic impact assessment. The outcomes of these assessments are positive. The expected operating deficit with such a publicly owned facility has decreased from the 2017 and 2019 cost analyses completed by SFA. The direct and indirect spending by visitors further offsets losses at the facility to make the project viable. The annual operating costs remain estimates. The completed studies by Victus Advisors and HVS indicate that the operational model favoring sports tourism with community use will create an annual operating deficit of $363,400 in a normalized year. HVS estimates that the annual tax revenues generated using only local sales and use tax, lodging tax, and the per- room night tax will be $1,362,800. This estimate does not include meal tax revenues. The HTRFA acknowledges that a typical recreational facility is unlikely to profit or satisfy its expenses through directly generated revenues due to the public use of parks and recreation programming. However, the HTRFA believes, as do the consultants, that the possibility of revenue generation is much more substantial with this regional facility proposal. Despite that analysis, there is always the possibility of an operating shortfall. The indirect gains generated in each of our localities will offset our financial commitments toward operating the facility and help to reduce the burdens of accepting capital costs. Financing Plan: Below is an example of the financing formula applied to the regional sports center project after the third year: i. Capital Construction Costs - $80 million (debt service) a. The City of Williamsburg - $7.7 million existing project account balance b. The City of Williamsburg - $2.5 million annually c. HTRFA - $5 million existing project account balance Page 1 of 2 Page 8 of 11  d. HTRFA - $1.5 million annually (MoE funds, §58.1-603.2 Code of Virginia) ii. Operating Costs - $3,869,500 Annually (based on a stabilization year) a. Annual contribution to Operating Reserve - $200,000 b. Annual contribution to Capital Reserve - $118,300 c. Annual Lease Payment - $220,000 d. Operator Fee - $222,000 e. Total annual operating costs = $4,629,800 iii. Operating Revenues - $3,506,100 Annually (based on stabilization year) a. Annual JCC Supplement – $561,850 (capped at $800,000) b. Annual York Supplement - $561,850 (capped at $800,000) c. Total annual revenues = $4,629,800 Locality Funding: The proposed financing plan includes the City of Williamsburg providing 64% of the annual debt service payment, and the HTRFA will supply the remaining 36%. Additionally, the plan prescribes that James City and York County shall provide a total of $1,600,000 annually for the first five years of operation to fund the annual operating expenses and reserve accounts. Beginning in the sixth year of operation, the Counties will divide an annual operating funds request from the HTRFA that is based on the HTRFA budget process. The division of this request may be defined by a separate agreement but shall include an annual minimum payment of $300,000 and a maximum payment of $800,000. Previous Relevant Action September 14, 2022 - The HTRFA Board selected the MEB/Clark Nexsen design team to develop 35% drawings for a regional sports center June 23, 2023 - The HTRFA Board issued a Request for Information from potential operators of the regional sports center October 10, 2023 - The HTRFA Board issued a Request for Proposals from potential operators of the regional sports center October 19, 2023 - The HTRFA Board issued a Request for Proposals from entities interested in naming rights for the regional sports center Staff Recommendation Staff recommends that the financing plan be approved as proposed. Page 2 of 2 Page 9 of 11 Staff Contact Andrew Trivette, City Manager Agenda Item Wording Consideration and Action Regarding the Request for Locality Support and Commitment to the Design, Cost, and Financial Plan for the Proposed Regional Sports Center Project at the Colonial Williamsburg Visitor Center Site Background Information Locality Financial Commitment: The success of this project is dependent on regional support. The City's commitment to funding for the project is designed to satisfy 64 percent of the estimated debt service following the decision to proceed with construction. After the 2022 statutory amendment, the HTRFA's MoE funding will fulfill the remaining 36 percent of the capital needs. The most significant obstacle to completing the project remains meeting the anticipated operating costs and funding the required reserve accounts. The HTRFA asks the counties to satisfy any operating shortfall up to a maximum of $800,000 and meet the needs of two reserve accounts with an annual minimum contribution of $300,000. Financing the project will depend on a binding financial commitment from all parties before authorizing construction. The elected bodies are asked to execute a MoA outlining annual financial responsibilities. The MoA prescribes that the City of Williamsburg and HTRFA provide the funds necessary to service the debt for the facility's construction. The MoA further details that the Counties will satisfy any annual operating deficit with an annual maximum and minimum contribution. The proposed yearly financial commitment of the Counties includes meeting any operational deficit and contributions for operating and capital reserves. Given the initial performance analysis, we expect an operating deficit to approximate $300,000 in a stabilized year (the minimum annual contribution), but that amount shall not exceed $800,000 per County annually. Funding the purchase of furniture, fixtures, and equipment (FF&E) while establishing adequate reserves is critical to the initial success of the project and will require an initial five years of maximum funding from the counties ($1.6 million total or $800,000 each) which is also a component of the MoA. HTRFA Action: The HTRFA Board is asked to approve and direct the Chair to transmit a letter of request and a MoA consistent with the HTRFA approved design, cost, and financial plan for the regional sports center at the Colonial Williamsburg Visitor Center site. Page 1 of 2 Page 10 of 11 Staff Recommendation Staff recommends that the HTRFA seek locality commitment for the proposed sports center project. Page 2 of 2 Page 11 of 11