Princess Anne Commons Youth Baseball Complex and Stadium

City Council Briefing February 4, 2014

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Background

• January-June 2013 - Two private investment groups separately approached the City to develop and operate a youth baseball tournament complex in Princess Anne Commons.

• August 13, 2013 – City Council briefed in closed session. Staff directed to proceed with

seeking interest in the project through an open and competitive process. • September 6, 2013 – Request For Interest & Qualifications (RFI) advertised for Youth

Baseball Tournament Facility and Additional Athletic Facilities. • October 7, 2013 – City received four proposals in response to RFI.

• November 26, 2013 – City Council briefed in closed session on VBPB proposal. Staff is

directed to begin negotiations with VBPB. Councilman Uhrin and Councilwoman Henley serve as liaisons.

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Project Team

City of Virginia Beach John Uhrin, City Council Barbara Henley, City Council Cindy Curtis, Deputy City Manager Alex Stiles and Debra Bryan, City Attorney Office Michael Kalvort, Director, Parks and Recreation Barbara Duke, Parks and Recreation Kevin Bennington, Parks and Recreation Nancy Helman, Sports Marketing Director Nancy Leavitt, Finance Stephen White, Planning David Couch, Economic Development Bill Davis, Purchasing Brailsford and Dunlavey, Consultants

Virginia Beach Professional Baseball, LLC (VBPB)

Joe Pinto Clay Dills

James F. Short John Hawley Terry Dugan Brian Kirwin

Edward Bourdon, Legal Counsel

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Virginia Beach Professional Baseball Proposal

Stadium and Commercial Space 5,000 seat stadium with 2,000 berm seats • The stadium will host an independent Atlantic League Team. • Secondary tenant is the Coastal Plain League, a summer wooden bat league 60,000 s.f. office building • Prospective tenants include Sentara and Tidewater Community College. All tenants will be

restricted to sports related education and businesses.

Youth Baseball Complex 13 lighted diamond fields (10 with artificial turf) • Host 30 national, regional and local baseball and softball tournaments for youth ages 5 -20 annually • Host men’s and women’s regional and national softball tournaments • Community league games and tournaments • Collaborate with CVB Sports Marketing and Parks and Recreation to book tournaments and develop

VB hotel/restaurant packages for participants

Princess Anne Athletic Complex 4 softball fields • VBPB to construct four new softball fields for public use. VBPB to have exclusive use of 12 PAAC fields

for 3 weekend tournament events per year and weekday use before 3 p.m. for training, clinics and camps

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VBPB Proposed Site Plan

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• 13 lighted diamond fields (10 w/ artificial turf) on 90 acres designated for economic development in ITA master plan

• Stadium of 5,000 fixed seats + 2,000 berm seating

• 60,000 s.f. of commercial office space

• Central wooded park area

• Playgrounds • Concessions/Restrooms • Maintenance facility • 1,100+ new parking spaces N

VBPB Proposed Additional 4 Softball Fields at PAAC

• The 4 new fields at PAAC will allow Parks and Recreation to schedule an additional 64 league games Monday through Thursday, opening Friday night for tournament play

• By providing the opportunity for more Friday

night tournament play, PAAC can accommodate more three day tournaments

• The additional 4 fields will also allow the PAAC

to host 72 teams per event, a 24 team increase over current capacity, increasing the rental income for a three day event by $3,600

12 PAAC fields plus 13 VBPB fields = 25 fields in close proximity

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N

Project Structure

Stadium 5,000 Fixed Seat + 2,000 Berm Seating

60,000 s.f. Commercial Space

Baseball Complex with 13 Fields

4 Additional Softball Fields at PAAC

I. Lease Term 30 year land lease 30 year land lease 15 year land lease with 3 year renewals; City to give 3 year advance notice of termination. Total lease term not to exceed 30 years.

N/A

II. Rent Nominal for land leased Nominal for land leased Nominal for land leased

N/A – Owned and operated by the City

III. Construction Cost VBPB responsible for all costs

VBPB responsible for all costs

VBPB responsible for all costs

VBPB responsible for all costs

IV. Operational Cost VBPB responsible for all costs

VBPB responsible for all costs

VBPB responsible for all costs

City responsible for all costs; VBPB allowed use of PAAC fields at no rental cost 3 weekends per year plus day use for camps/training

V. Renovation and Repair VBPB responsible for all renovations/repairs

VBPB responsible for all renovations/repairs

VBPB responsible for all renovations/repairs

Parks and Recreation responsible for all renovations/repairs

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Summary of Terms • Lease on Stadium/Commercial parcel for 30 years; lease on Youth Baseball Complex parcel for 15 years

with 3 year extensions up to a total of 30 years • VBPB to be responsible for for all construction, operating and maintenance costs.

• VBPB to be responsible for capital infrastructure renewal and replacement at a minimum contribution of:

• City to make an incentive payment to VBPB equal to a portion of the admissions and real estate taxes paid

by VBPB annually at stadium and youth baseball complex, subject to appropriation, at the following rates:

• City to widen Landstown Road to serve new youth baseball complex as well as planned municipal uses on

city-owned land within the Interfacility Traffic Area south of Princess Anne Commons ($7.4 million)

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Years 1-5 $250,000

Years 6-10 $350,000

Years 11-20 $400,000

Years 21-30 $450,000

Years 1-5 85%, no cap

Years 6-10 75%, no cap

Years 11-20 60%, no cap

Market Analysis Source: City of Virginia Beach Sports Complex Market & Financial Analyses

Brailsford and Dunlavey, January 2014

Strong market potential for both youth tournaments and stadium attendance – Over 1 Million people within 30-minute drive time – Attractive to event organizers due to regional population, mild weather and resort destination – Median age is 35 years, a positive indicator for fun family entertainment

8 Existing Atlantic League Teams located in New York, Pennsylvania, Maryland and Texas 2 Expansion Teams in the planning stages in Loudon County, VA and Virginia Beach, VA

The new Atlantic League Team will share the market with the Norfolk Tides comfortably – Norfolk Tides are a Triple-A affiliate of the MLB Baltimore Orioles – Norfolk Tides average attendance per year over five years is 389,835 people or 36% of the market – Average market capture rate for MiLB affiliates is 45% – The new Atlantic League team has the opportunity to pick up the uncaptured 9% (95,000) of the

Norfolk Tides market

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Economic Analysis Source: City of Virginia Beach Sports Complex Market & Financial Analyses

Brailsford and Dunlavey, January 2014

$20.8M Annual Economic Activity

Generated*

15,422 Room Nights

Annually

$7.9M 283 Jobs

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*This graphic shows the cumulative recurring economic impact of the stadium and youth tournament complex. It is important to note that the above $20.8M figure does not reflect “displacement”. In other words, spending within the ballpark, on items such as food and beverage and merchandise, is largely a redistribution of existing entertainment spending within the marketplace. A significant portion of the spending is not “net new” to the local economy, but rather, redirected spending from other means of entertainment (such as the movies).

Financial Analysis Source: City of Virginia Beach Sports Complex Market & Financial Analyses

Brailsford and Dunlavey, January 2014

Project Cost Stadium $21.0 Commercial 7.7 Baseball Complex 11.3 PAAC Fields 3.7 Soft Costs 6.3

Total Project (in millions)* * Does not include the $7.4 M city cost to widen Landstown Road

$50.0

Financing Equity $6.3 Debt Issued by 3rd Party* 43.7

Financing Sources

$50.0

* Debt will not be considered City debt by rating agencies and will be non-recourse to City. An entity will be created that will issue the debt and own the facilities; this entity will lease the facilities to VBPB. Piper Jaffray will issue private placement bonds. The bond sale size will include capitalized interest and other costs of issuance.

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B&D estimates that the above project costs to construct stadium and tournament fields are accurate

Financial Analysis Source: City of Virginia Beach Sports Complex Market & Financial Analyses

Brailsford and Dunlavey, January 2014

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VBPB Brailsford and Dunlavey Variance

Total Income (Year 5) $10,585,740 $9,090,000 $1,495,740

Total Expenses (Year 5) ($4,786,363) ($6,298,000) $1,511,637

Net Income before Debt* $5,799,377 $2,792,000 $3,007,377

Stabilized Year 5 - Project Pro Forma Comparison – Part 1

*Earnings before interest, taxes, depreciation and amortization

Year 5 represents a stabilized year of operation. Income: VBPB > Brailsford and Dunlavey Expenses: VBPB < Brailsford and Dunlavey Net Income Before Debt: VBPB > Brailsford and Dunlavey The majority of the variance of $3,007,377 is based on stadium income and expenses

The primary drivers for income are stadium attendance and number of teams participating at youth tournament complex.

The caliber of the operator will be the greatest determinant of the number of spectators that will ultimately attend events at the stadium and the number of teams participating at youth tournament complex. All Atlantic League facilities are owned by public entities including cities, counties and redevelopment authorities and were constructed with public financing. Typically, the Atlantic League tenant contributes only a portion (16%-30%) of equity or debt to the project.

The investors/lenders will be made aware of the B&D Study.

Financial Analysis Source: City of Virginia Beach Sports Complex Market & Financial Analyses

Brailsford and Dunlavey, January 2014

VBPB Brailsford and Dunlavey

Net Income Before Debt (Year 5) $5,799,377 $2,792,000

Debt Service* ($3,600,000) ($3,600,000)

Capital Improvement Fund ($250,000) ($250,000)

85% Real Estate and Admissions Tax Incentive**

$380,000 $380,000

Net Income After Debt Service and Capital Improvement Fund

$2,329,377 ($678,000)

*Assumes $46.5M amortized at 6.5% for 30 years ** Admissions Tax Based on B&D Gate Receipt Estimates

Stabilized Year 5 - Project Pro Forma Comparison - Part 2

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Benefits of VBPB Proposal • Advances goals of Princess Anne Commons Athletic Village • Provides new facilities, parking infrastructure and park space that are consistent

with ITA and AICUZ restrictions • Total direct tax revenue after incentive for the stadium, fields and commercial is

estimated at $500,000 in Year 5(stabilized year) • Attracts regional and national youth baseball and softball tournaments in

collaboration with CVB Sports Marketing and P&R staff resulting in additional room night stays April through October for hotels in Virginia Beach

• Accomplishes construction of Phase II of Princess Anne Athletic Complex

(additional 4 tournament softball fields) with private funding. • Improves community recreation amenities allowing for increased utilization and

enjoyment. Increases diamond field inventory to 25 within Princess Anne Commons

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Potential Timeline

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February 4, 2014-Brief council on summary of terms at open informal session

February 2 and February 9, 2014 – advertise for public hearing and lease bid

February 11, 2014 – CC to hold public hearing and vote on lease and terms

March 2014– VBPB submittal of site plan to DSC

April 2014 – Planning Commission will hold public hearing and vote on Conditional Use

Permit and Zoning Modification

May 2014– CC to consider Conditional Use Permit and Zoning modification

June 2014- Groundbreaking and start of construction

May/June 2015 – Fields and stadium open for play

Thank You Questions?

City Council Closed Session Briefing January 28, 2014

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