TC - why does the mainstream press say 205m when the actual cost was 235m

Good question. I actually heard $245 MIL.

Although, when they say $205 MIL, they might be referencing what it cost the HCSA. Les pumped in alot of money to make up the rest.

 

The arena was $205 million. The parking garage cost $30 million. Most of the local reporters put them together because they understand what went into the whole process.

But, if you ask the team, "How much did it cost to build Toyota Center?" The response is $205 million because that is what the building cost.

A little on the nit picky side, but accurate.

Also, Les is pitching in what equates to roughly $100 million of the $205 million total. The $30 million is being paid for through an interest-free loan from the same sports group (made up of local business leaders) that provided a similar loan for the land Minute Maid Park sits on.

 

Jeff, the $30 million loan will still have to be paid though, right? Meaning Houston taxpayers via the Sports Authority still have to pick up the tab on the garage (although Sports Authority will gain the income from the garage for non-Rockets/Comets events, correct?)

Other than the garage and Les' (was it $5.5 million?) rent (including the $200K from naming rights), does the Sports Authority gain any other income from the Toyota Center?

 

Being an out of towner, I am all of a sudden interested in the details. Ok, so basically I know how much everything cost. The arena $205M+, the garage cost an extra $30M. Les pays $100M, the city pays $100M. Who pays for the garage (other than it being an interest free loan)? How does the Rockets rent factor in (is that part of the $100M or is the rent in addition to)? How much do the Rocks get from Toyota (and how much does the city get if any)?

 

Boy, I thought the arena campaign was over.

Just kidding.

Ok, first, the SA doesn't get any income. It is a government entity that simply facilitates the building of these facilities through the collection of tax revenue from a 2 percent hotel tax and an approximate 5 percent rental car tax.

The garage will be repaid, however, because it is interest free, it allows the authority to pay that out of revenue from interest on bonds created from invested tax dollars. I don't claim to understand the full scope of the financing, though the SA's Finance Chair Ric Campo told myself and Eric Berger from the Chron at an event in 2000 jokingly, "You know, this table probably represents about a third of the people who fully understand this arena letter agreement."

Les pays just under $7 million per season and is responsible for upkeep of the building.

As for return on investement, the City of Houston receives all revenues from the parking garage during the daytime hours as well as revenues for non-arena events (i.e. use of the garage during George R. Brown Convention Center events). The city also receives 5 percent of the naming rights or approximately $5 million over the next 20 years.

I may still have a copy of the letter agreement if you want to read all 20 pages of it.

I think I answered the first couple of questions. The Rockets rent is $7 million per year for 30 years. Though that total comes to $210 ACTUAL dollars, because it is spread out over time and doesn't account for changes in interest rates or inflation, it equates to $100 million in real present-day value.

As I said above, the naming rights deal with Toyota is $100 million over 20 years. The city receives 5 percent of that figure or $5 million total.

Any more questions???

 

Jeff, I know you're sick to the teeth of this stuff, so I appreciate you answering questions on the arena YET AGAIN.

I've read the Aug. 2000 letter agreement. (It's available on the Houston Sports Authority's website, UTrocket, if you're interested.) However, I remember some changes being made after discussion with Judge Echols or something; if you happen to have on paper the specifics of whatever changes were made, Jeff, I actually would be interested in reading it.

I didn't realize the loan essentially pays off the parking garage bonds for the Sports Authority. That's really good.

Do you have any clue how much the revenue from the garage is projected to be annually? Just trying to get a sense of how much of the $200 million minus Les' contribution in rent will actually have to be paid from the hotel and rental taxes revenue.