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SBJ/May 11 - 17, 1998/No Topic Name
State says refinancing Georgia Dome bonds will save $61 million
Published May 11, 1998
The state authority that manages the Georgia Dome in Atlanta has refinanced $188 million of stadium bonds, a move the agency expects will save $61 million, or $2.6 million a year, over the life of the debt.
The bonds were initially issued in 1990 to fund construction of the facility, which opened in 1992. Falling interest rates and surging facility and tax revenue convinced the Georgia World Congress Authority, who manages and owns the facility, to refinance, said Dan Graveline, the authority’s executive vice president.
The bonds also received insurance, allowing the authority to drop a letter of credit with SunTrust Banks Inc. Hotel and motel taxes, plus revenue back the bonds from the stadium. Hotel and motel taxes and the remainder through facility revenue pay Eighty-five percent of the debt payments. By the year 2000, the tax should cover nearly all of the payments.
"The Georgia Dome’s net revenues have been between $5 million and $9 million each year," said Larry Levitz of MBIA Insurance Corp., which insured the bonds. "We felt the hotel/motel tax collections were certainly nearly enough by themselves to cover debt service, and when combined with the successful operating history, we felt there was certainly a margin of comfort."
While the refinancing of the Georgia Dome debt is primarily a public deal, it is another indication of the comfort financial experts like Levitz have with the private revenue being generated by stadiums and arenas.
Last month, MBLA insured all of the private debt issued to fund construction of the American Airlines Arena, soon to be the home of the NBA’s Miami Heat. And AMBAC Insurance Corp insured refinanced bonds for the America West Arena. Both deals relied heavily on arena revenues.
The Georgia Dome refinanced bonds were bought by investors in April, but under a mechanism known as forward refunding, the bonds actually will not be delivered to investors until 2000.
The NFL’s Atlanta Falcons play in the stadium, and the NBA’s Atlanta Hawks have been playing part of their schedule there while their new arena is under construction.