Off the Kuff Rotating Header Image

Harris County-Houston Sports Authority

The Sports Authority wants you to know it’s working hard for you

I feel like the Chron should send a bill for its standard advertising rates to the Harris County-Houston Sports Authority for running this op-ed by its chair, J. Kent Friedman. It’s one part victory lap for negotiating the Dynamo Stadium lease and one part “Hey! Look at all this stuff we’re doing!” rah-rah. I like the Dynamo Stadium deal as much as the next guy, but the basic outline for it was in place long before the HCHSA got involved at El Franco Lee’s insistence earlier this year. As for the rest, nice work and all, but next time just send out a press release, OK?

On a side note, since the recent Port Commission kerfuffle, I thought it might be useful to examine the membership of the boards and commissions I happen to blog about. The Sports Authority board is thirteen members, six each chosen by Houston and Harris County, plus one – Chair Friedman – chosen jointly. Of the six board members selected by Harris County, five are white and one is African-American. Of the six chosen by the city of Houston, two are white, two are Hispanic, one is African-American, and one is Asian. Of the five non-white members on the board of 13, four were city of Houston appointments. Oh, and both of the women on the board – one white, one Hispanic – were City of Houston appointees. Just thought you’d like to know.

Dynamo Stadium lease deal reached

We didn’t get the World Cup, but soccer fans here had something to celebrate this week.

The Dynamo have agreed to pay $76 million to build a professional soccer stadium in downtown Houston and then lease it from the city and county for $65,000 a year.

The board of the Harris County-Houston Sports Authority, a joint city-county agency that acts as a pro sports stadium landlord, unanimously approved the deal Thursday morning. While the Dynamo will pay most of the cost of construction, the city and county will own the stadium.

Thursday’s approval sets the stage for construction to begin as early as next month just across U.S. 59 from the George R. Brown Convention Center.

The deal still has to be approved by Houston City Council and Commissioners Court, but I expect both to happen this month. Looking through the archives, the first mention I can find of “Dynamo Stadium” is just over four years ago, shortly after they had settled on the team’s name. You can’t say we’ve rushed this, that’s for sure. Construction is projected to take about 16 months, meaning the stadium may be open in time for the 2012 MLS season. In addition to being the home of the Dynamo and TSU football, the new stadium will also be a live music venue.

The Dynamo’s owners, entertainment giant AEG Worldwide, will be looking to book musical acts into the 22,000-seat stadium.

The Dynamo has worked out a somewhat informal non-compete clause with the Toyota Center, but there’s no such agreement with the Cynthia Woods Mitchell Pavilion.

The Pavilion’s capacity is about 17,000; with field seats the new stadium could hold 25,000.

“We’re a larger venue…Our parent company is AEG, that’s their business, live entertainment and they do a lot of musical shows across the country,” Canetti said. ” So I suspect that we’ll be looking to do a handful of shows if not more in the new stadium.”

Canetti noted the Pavilion’s success. “I think they have a niche both in terms of where they’re located and the size of the venue and I think we’re going to provide something that’s just a little bit different for everybody.”

Sounds good to me.

Dynamo Stadium on the agenda

The Sports Authority will meet this week to try to hammer out a lease agreement for the Houston Dynamo in their future stadium.

The Sports Authority will meet Dec. 2, but it won’t meet again until February, which is partly why the lease topic was placed on the agenda.

[Sports Authority Chair Kenny] Friedman said the lease was put on the agenda to give the Sports Authority a chance to vote on it if all the issues are resolved in the negotiations between the Sports Authority and the Dynamo.

I figure it’ll happen in time for the meeting. Deadlines have a way of focusing the mind.

Once again mulling the fate of the Astrodome

Am I the only one who noticed the omission in this story about the current state of the Astrodome?

Debt and interest payments will amount to more than $2.4 million this year, according to a payment schedule for the higher debt estimate. The Astrodome’s manager estimates it also will cost $2 million for insurance, maintenance, utilities and security.

The debt likely would have to be reckoned with in any deal to redevelop the Astrodome, said Willie Loston, executive director of the Harris County Sports & Convention Corporation, which the county created to run the Reliant Park complex.

But no deal to restore what once was known as the “Eighth Wonder of the World” is likely to be affected by $32 million, Loston said.

“Practically anything that would be done with the building would be some multiple of that,” Loston said. “It’s not enough to make or break a development proposal.”

Not a word is mentioned about any specific redevelopment project. Nothing about the planetarium, the movie studio, or the convention center. Does that mean all these ideas are now officially dead, and that the most likely but still only spoken about in whispers outcome is this? You tell me.

That story was also about Commissioners Court finally getting around to the matter of the Dynamo Stadium deal. As expected, they approved it.

County Judge Ed Emmett emphasized that the Dynamo deal differs sharply from past stadium projects in which taxpayers picked up a much greater share of the tab.

“This is a team building its own stadium,” Emmett said.

Nor does the Dynamo deal cost any general fund money, Emmett and other county officials reaffirmed. Instead, a redevelopment zone will be created around the stadium so that future increases in tax receipts in the neighborhood will be funneled back into the project.

[…]

Much remains to be done before construction begins in October for a planned 2012 opening.

“This is, practically speaking, an agreement to agree,” said David Turkel, who as director of the county’s community services department is negotiating the deal with the city.

The Dynamo and the Harris County-Houston Sports Authority must negotiate a lease for the soccer team’s use of the stadium. The city and county must also formally approve the creation of the redevelopment zones.

It’s still a significant step forward, and it ought to be a lot easier from here now that the basic framework is in place. Enjoy the moment, Dynamo fans, it’s been a long time in coming.

Council approves Dynamo Stadium deal

Two down, one to go.

The Houston City Council unanimously approved an agreement this morning that is expected to pave the way for a new professional sports stadium for the Houston Dynamo and the Texas Southern University football team.

Although some council members voiced concerns about the finances of the $95 million public/private project, many came to view the deal to be in the city’s best interest.

[…]

The next step in the process will be Tuesday at Harris County Commissioners Court when the deal has to be approved by the county.

The first step was the Sports Authority agreeing to be the landlord. For those who are mumbling about spending money on a stadium at a time like this, note that the city spent the money to buy the land for the stadium site two years ago, and that part of the deal with the county is for them to kick in for half of that. In addition, having the Dynamo spend $60 million or so to build the stadium, at a time when the city has been bleeding construction jobs seems like a pretty decent little stimulus project to me. Just something to consider.

Sports Authority to become Dynamo Stadium landlord

One of the items on the to-do list after the city and county struck a deal on Dynamo Stadium was for the team to negotiate a lease for the stadium. The Harris County-Houston Sports Authority was proposed as the landlord, and now they have formally agreed to take that role.

The city and county asked the sports authority to negotiate a lease of publicly owned land to the Dynamo, to oversee construction and to run the completed stadium. The authority’s board unanimously passed a resolution to take on those tasks.

“This is kind of the last piece of the puzzle,” said David Turkel, director of the county’s Community Services Department. “Now that we have everything in place, our governing bodies can formally consider it.”

Attorneys for the three agencies will craft details of a formal agreement. The City Council, Commissioners Court and the authority board are scheduled to act on the deal in the next three weeks.

So there you have it. Start making plans for the groundbreaking ceremony. It’s all over but for the construction at this point.

Here comes the Sports Authority

Ready or not, here they are to ride to the rescue.

The Harris County-Houston Sports Authority agreed Monday to talk to city and county officials about its possible involvement in a soccer stadium for the Houston Dynamo.

The authority will establish a task force to determine its response to an invitation from the city and county to take “a limited administrative role” in a stadium for the Dynamo. Board Chairman J. Kent Friedman said the task force will be charged with finding out what that its role would be and recommending to the board whether to accept it. It will not involve any tax money from the authority. There is no deadline for the task force to finish.

I still don’t think the Sports Authority is really needed, but if it’s the only way to get El Franco Lee to take action, then I guess that’s how it is. We’ll see if it actually leads to something.

Sports Authority to the rescue?

After many months in limbo, there may finally be a way forward for Dynamo Stadium, though it’s a somewhat convoluted path.

The Harris County-Houston Sports Authority board is scheduled on Monday to discuss becoming the landlord for a professional soccer stadium in Houston’s East End.

[…]

[Harris County Commissioner El Franco] Lee repeatedly has said that putting the soccer stadium on the Commissioner Court agenda is not his responsibility. Most of the proposed stadium site is in Lee’s Precinct 1, and the five-member Court consistently adheres to a protocol that puts each commissioner in charge of public works projects on his or her turf.

On Friday, just more than a week after [Mayor Annise] Parker and Lee met, a joint Houston-Harris County statement announced, “Both the City and County have asked the Harris County-Houston Sports Authority to take a limited administrative role in construction of a stadium.”

Harris County Community Services Department Director David Turkel, who has been the county’s lead negotiator on a stadium deal with the city, acknowledged it was Lee who asked that the Sports Authority get involved.

Should the Sports Authority’s board decide Monday to become a player in the deal, it would bring to the table an agency whose board is chaired by Lee’s campaign treasurer, J. Kent Friedman.

Sheesh. Swamplot quotes from a Houston Business Journal article that adds more:

Lee has steadfastly refused to comment on the issue, and did not respond to interview requests. Speaking in Lee’s place during several recent interviews, Turkel has become more guarded, citing the delicate situation and his desire to avoid hampering a possible agreement. In a nutshell, though, Lee wants concessions from the city and the team that he has not yet received.

“Lee is not comfortable putting it on the agenda as is, because it will get voted down,” Turkel says.

For one, the county is looking at who will own the stadium after the lease runs out in about 30 years, and how that would affect a deal in which the city would buy out the county’s share. Precinct 2 Commissioner Sylvia Garcia wants Dynamo family ticket packs priced comparably to movie tickets, which has been more or less agreed upon.

That quote from Turkel just doesn’t square with the way Commissioners Court runs its business. Wanting to get the Sports Authority involved, that makes more sense. It may be a logical move and a good fit to do this, but I think Judge Emmett is right to be concerned that it won’t make the politics of this deal any more popular. It’s also not clear what exactly the Sports Authority would be doing if it gets involved or why their involvement is needed. If they were an obvious piece of the puzzle, you’d think they’d have been mentioned before now. But if the bottleneck is El Franco Lee, and El Franco Lee says he wants the Sports Authority involved to get this moving, well, you do the math. We’ll see what comes out of Monday’s meeting.

The Sports Authority responds

J. Kent Friedman, the chairman of the board of the Harris County-Houston Sports Authority, contributes this op-ed to counter the idea that taxpayers may be on the hook for some of its obligations.

• • Up to $4 million per year of Reliant Stadium parking revenue was pledged to back any shortfall in the Reliant Stadium bonds. The bond insurance company required this pledge, due to the Texans being a brand new entity with no prior financial history. Since the opening of Reliant Stadium, approximately $56 million in parking revenues have been received by Harris County. Until this year, none of those revenues was ever needed. Due to the credit crisis, up to $4 million per year of those parking revenues will now be used during the five years of accelerated payments.

• • If for any reason, the sports authority is unable to make payments on the bonds, the bond insurance company, MBIA, would be required to pay the debt service on the bonds, which is exactly why the sports authority purchased insurance when the bonds were issued.

• • If the bond insurance company for some reason did not pay the bonds, then either JPMorgan Chase or the bondholders would have to wait until enough funds were collected through the current financing structure, or until the sports authority could refinance, if feasible.

This is basically the argument that Gene Locke made in my interview with him. All I can say is that the previous reporting, both in the Chron and elsewhere, does not give the impression that JPMorgan Chase or the bondholders would have to wait to get the money they’re demanding. And even if that is the case, it seems to me that refinancing may well include the possibility of higher annual payments, as such a re-fi may mean shorter terms for the loan. Friedman didn’t address that point, nor did he specifically call out any aspect of the Chron story as wrong, so I don’t know if that means I’m misunderstanding something, or if he’s simply glossing over that stuff. But there you have it from their perspective.

The hole the Sports Authority is in

Sure is a great time for stuff like this to happen, isn’t it?

Harris County taxpayers may have to inject up to $7 million a year into the Harris County-Houston Sports Authority for the next two years due to a financial crisis sparked by the souring of bonds used to build Minute Maid Park, Reliant Stadium and the Toyota Center.

Facing balloon payments on $117 million in variable-rate bonds, the authority now is obliged to pay off the debt in five years instead of 23 years. That would require $24 million a year — a figure that, together with more than $30 million in additional obligations, would push the authority to the brink of insolvency.

The alternative: Convince major banks to provide lines of credit that would give the authority a two-year window to refinance. That would cost $7 million a year.

But those deals would create a new set of problems: The authority would have to take $7 million a year now used for stadium maintenance and the expenses of the Harris County Sports and Convention Corporation and spend it on repaying the loans. To make up the difference, Harris County may have to pick up some of those expenses with property tax revenue, a step that some say indirectly violates stadium boosters’ promise that taxpayer dollars would not be used to pay for the new venues.

Bloomberg had a story about this a few days back as well. I’ll admit it, I voted for the stadium deals when they were on the ballot. I believed at the time that they provided an economic boost for the cities that built them – the research is clear now that that is not the case – and I believed the assertions about how they would not be paid for with tax revenues. Live and learn. I still don’t regret my votes, as I believe the city has gotten value out of all that construction, and I suspect that in the end the refinancing will go through, which will make this not be a crisis any more. But it isn’t what we were promised, and there ought to be some consequences for that – if it means the dissolution of the Sports Authority, or at least a huge curtailment in its mission, that’s a good start. I’m curious as to why the name Gene Locke did not come up in this story, since he has longstanding ties to the Sports Authority and has touted his involvement in the stadium deals as part of his qualifications to be Mayor. Seems like it would be a good idea to get his reaction to this on the record, don’t you think?