Friday, September 2, 2016

UA Board sets vote on $120 million in stadium bonds

Posted By on Fri, Sep 2, 2016 at 11:36 AM

UA BOARD VOTE SET: On bonds for Razorback Stadium expansion.
  • UA BOARD VOTE SET: On bonds for Razorback Stadium expansion.
Approval of up to $120 million in bonds for a $160 million expansion of Razorback Stadium is on the agenda for the University of Arkansas Board of Trustees meeting Wednesday and Thursday in Little Rock.

The board will vote on resolutions to approve the bonds; hire the Mitchell Williams law firm as bond counsel, and split the bond underwriting work this way: Stephens Inc. and Crews & Associates, co-senior managing underwriters, and Raymond James & Co.  and J.P. Morgan Securities, co-managers.

The university has said previously that the cost would be $186 million with interest if the bonds are paid out over the full 20-year term. That would make the total project cost, under current estimates, $226 million.

The bonds will be obligations of the Board of Trustees. The resolution says they will be secured by "a pledge of revenues derived from athletic gate receipts and any student athletic fees collected by UAF." The UA currently charges no student athletic fee and officials have said repeatedly they'd charge no student fees to support athletics including the new project. The department is self-sustaining through private contributions, a lucrative TV contract, premiums for seats at football games and licensing deals. I suspect the language about fees is holdover boilerplate from past bond issues and is not a signal of future plans. I have questions out to confirm this.

UPDATE: Kevin Trainor in the athletic department confirms:

That is the same language that has been in the bond indenture and bond resolutions for many years, going back at least to the early 90s. You are correct in that there is no student athletic fee now and no plans to implement a student athletic fee.

The stadium construction project is projected to cost $160 million, not counting the $66 million in bond interest. In addition to $120 million in bonds, $40 million is expected to be raised in private fund-raising. Some of that is targeted in sale of new "Founders Suites" in the stadium, at a cost of $3 to $3.5 million. In June, Scott Varady, director of the private Razorback Foundation, said they had commitments for five suites. He said he remains optimistic about the final sales figure, but doesn't have a final accounting. Athletic Director Jeff Long has said the $40 million is guaranteed  one way or another —counting $20 million from suite sales and $10 million each from Athletic Department and Foundation reserves. 

Here's the bond resolution.
David Pryor, the former governor and senator and UA Trustee, has objected to the size of the project but the Board earlier approved the project in an 8-2 vote

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