Thursday, January 21, 2010, 2:12pm PST
City, Paulson finalize PGE Park deal
Portland Business Journal
http://portland.bizjournals.com/portland/stories/2010/01/18/daily41.html
The city and Portland Timbers owner Merritt Paulson have reached a deal to renovate PGE Park in order to accommodate a Major League Soccer team. The deal will go to City Council next Wednesday.
Portland Mayor Sam Adams said the city’s final agreement with Peregrine LLC, the owner of the Portland Timbers and Paulson's Triple A Portland Beavers baseball team, would bring “immediate construction jobs to Portland and continuing revenue, visitors and vital spending to Portland’s central city.”
The $31 million project still needs City Council approval.
“I’m confident that this agreement will serve Portlanders now and for years to come,” Adams said in a news release. “We will put construction workers back to work right away, and in the long-term, MLS represents a smart investment in Portland’s future success. Building on the Northwest’s long-standing soccer heritage, we can bring Portlanders together around another great sports team.”
Under the agreement, the team wouldn’t be allowed to relocate for 25 years, or the length of the city bond terms sold for the project.
The agreement includes a clause calling for Peregrine to indemnify the city from any claim from the Pacific Coast League related to the Triple-A Portland Beavers not being able to use the stadium following the 2010 season. The clause could leave the door open for the Beavers to leave town.
It essentially puts any legal onus on Paulson, as opposed to the city, should the league object to the Beavers' relocation, said Ty Kovatch, Commissioner Randy Leonard's chief of staff.
Paulson declined to comment about the deal.
Along with the MLS Timbers, Portland State University’s football team will also use the stadium.
Among the deal’s terms, the Paulson family will guarantee stadium license fee and user fees for the first seven years of the operating agreement. At closing, Peregrine will pre-pay all such fees for years eight to 25 of the agreement.
Peregrine will also pay any cost overruns.
The funding breakdown:
Peregrine will pay $8 million in cash toward the project.
Peregrine would pay $11.1 million in prepaid license and user fees
The city would pay $11.9 million from its Spectator Fund cash and bond proceeds. That share could be reduced if the city can save contractors money in Systems Development Charges.
Peregrine would also pay a fixed rate of 7 percent of its revenue.
Peregrine would be responsible for the stadium’s operations and maintenance.
The city’s contribution to the multi-use, LEED Silver certified stadium will be financed primarily through private investment by the Paulsons and by revenue from sports spectators, as recommended by the Major League Soccer Task Force.
The city’s liability is limited through numerous personal guarantees from the Paulson family, which ensure that the city will receive projected revenue even if the new MLS franchise or the league fails. Specifically, the Paulsons have made personal guarantees of operating revenue for 25 years and that the team will stay in the city for at least 25 years.