The City of High Point now has $35 million burning a hole in its pocket.
That’s because the city saw exceptional investor demand for its limited-obligation bonds being issued to fund a new baseball stadium that’s part of a much larger downtown revitalization project. The bonds are officially named the Downtown Multi-Use Sports & Entertainment Facility Taxable Limited Obligation Bonds and investors couldn’t get enough of them.
The bond offering, which was conducted on Wednesday, Jan. 17, was the first bond sale by a North Carolina local government in 2018, and the successful reception means the city is now one step closer to completing the stadium, which is scheduled to open in May 2019.
Since this bond offering was for a limited obligation bonds backed by the stadium itself – and not by the full faith and credit of the city – there was some anxiety among city officials as to how well the offering would be received. But those concerns were unfounded. Extremely high demand for the bonds allowed the city to get lower rates and better terms than initially anticipated, and now the 20-year payback for the stadium will total $49.7 million rather than the $52 million that was originally projected.
High Point Assistant City Manager Randy Hemann said the stadium project is now speeding along and the city has the money it needs to complete it.
“The bond sale went extremely well,” Hemann said. “It was oversubscribed. It’s phenomenal – we had $160 million in orders.”
That $35 million in bond money combines with $1.1 million in city-provided funds for a total amount of available amount of $36.1 million to build the stadium.
Hemann said city officials were glad to see that a lot of local investors bought the bonds. He said the rest of the project is also going well.
“Another big thing is that our environmental plan was approved,” Hemann said.
Demolition crews have already started the aboveground demolition but now, with the approval of the city’s environmental brownfields remediation plan, work crews can begin digging up concrete slabs.
Hemann said that, even though bids are being sent out for the project, some of the details aren’t yet finalized. He said things like the exact size of the food service area and the layout of some stadium sections are still being tweaked.
High Point Mayor Jay Wagner said it’s a big job and the city is attempting to work with the businesses that are still open on the land now owned by High Point where the stadium will be.
“There are still some timing issues with occupants,” Wagner said, adding that the city was trying to be as accommodating as possible while still allowing the project to adhere to the timeline.
He said demolition crews had been doing a good job clearing the way for the stadium site and the project had been getting “a lot of solid interest” from developers who want a presence in downtown High Point now that the stadium is a sure thing.
Wagner said there are a lot of moving parts to the project since it’s not just a baseball stadium but it also involves an events center, a children’s museum and private developments.
“There’s a lot of balls in the air,” the mayor said. “You’re not just talking about a stadium.”
In early December, High Point obtained the necessary permission from the State of North Carolina to issue the $35 million in debt, which was two months later than the city had originally planned. Wagner said the project is now unquestionably on a tight schedule.
“It gave us two less months to play with,” Wagner said of the delay in financing. “Obviously, it is very weather dependent so we are hoping for a drought for the next 15 months.”
The mayor said one problem is that people who want to participate often don’t know who to contact, given that there are so many parts of the project. Now that the stadium is underway, Wagner said, vendors and others are calling, wanting to do things like serve Dippin’ Dots ice cream treats at games, and sometimes, he added, it’s not clear who they should contact.
“It’s spurred a lot of interest,” he said of the stadium. “That’s part of the challenge.”
Wagner said those details are being worked out as they go.
The mayor also said that citizens of High Point are very excited about the stadium and he added that, even when it comes to those in the city who have opposed the project, much of the opposition wasn’t directed against the stadium itself but regarding the particular ways in which it was being handled.
High Point Financial Services Director Jeff Moore said he was extremely pleased with the way the bond offering went last week. He said High Point hadn’t done an offering of this type. He said it could be thought of as much like a “mortgage” – only instead of being a mortgage on a house, it was on a $35 million baseball stadium
The bonds, which carry a 3.56 percent average interest rate, are rated AA+ by Standard and Poor’s Financial Services and AA- by Fitch Ratings Inc. Current projections call for the bonds to be paid off completely in October 2038.
The bonds are taxable and Moore said one reason the city chose to issue taxable rather than tax-free bonds is that it gives the city more flexibility when it comes to spending the funds.