Thursday, February 6, 2014

UG commissioners approve lease agreement with T-Bones to take over CommunityAmerica Ballpark


KANSAS CITY, KAN. ----- The Unified Government Board of Commissioners approved of a lease agreement with the Kansas City T-Bones that allows the county to take over ownership of CommunityAmerica Ballpark.

In partnership with the State of Kansas, the agreement calls for $8.1 million of STAR bonds being used for the agreement. For the stadium's acquisition itself, $5.5 million in STAR bonds will be spent. An additional $2.5 million will be used for capital cost and upgrades.

As part of the agreement, a 20-year lease was agreed to between the Unified Government and the T-Bones.

However, the UG has the right to terminate the lease "for any reason and without cause" following the end of the 2016 season. The UG also has the opportunity to relocate the T-Bones to another stadium in lieu of termination rights.

The vote was not unanimous.

Commissioners Tarence Maddox and Gayle Townsend cast "no" votes --- and even a few of the yes votes were a bit wobbly.

Commissioner Ann Murguia expressed concern about the lack of involvement from the public about the agreement.

"I think staff has done an outstanding job, but I think even with  the history of the project, I wanted to ask the public if an $8 million deal....I think they should have a say in it," Murguia said. "It's not something government traditionally does without it being on a ballot."

A public forum was held last month about the proposal, but Murguia said the sample size wasn't large enough for a fair representation.

Still, after being initially disappointed with the proposal and the lack of communication between administrators and commissioners, Murguia voted for it.

Commissioner Hal Walker said his vote tied in with the history of The Woodlands. Of course, the horse-track by Wyandotte County Lake now is vacant and lifeless.

Walker said the failure of The Woodlands was due to the lack of foresight of the casino gaming and the fact the city did not control the property.

"The bigger problem is we had no control over the grounds (with The Woodlands)," Walker said. "If you're going in the development business and you don't control the ground, it's 10 times harder. The ownership of the ground will continue to be our benefit if (Western Wyandotte County) continues to prosper."

Below is the full agreement between the Unified Government and the T-Bones. It's lifted from the agenda for Thursday night's meeting:
1. Parties. The UG and T-Bones Baseball Club, LLC (“T-Bones”), which is a Minnesota limited liability company. The financial statements of the T-Bones are presently being reviewed by David MacGilivray, with Springsted Incorporated.

2. Purchase Price. The UG will pay $5,500,000 for acquisition of the stadium.

3. The Premises / Lease Term / Rent. The T-Bones Baseball Stadium (the "Premises") is to be leased by the UG to the T-Bones for a 20 year term expiring on January 31, 2034. Base rent is as follows:

1st Lease Year, $31,500 per year ($2,625.00 per month).
2nd Lease Year, $32,445.00 per year ($2,704.58 per month).
3rd Lease Year, $33,418.35 per year ($2,784.86 per month).
4th Lease Year, $34,420.90 per year ($2,868.41 per month).
5th Lease Year, $37,500.00 per year ($3,125.00 per month).
6th Lease Year, $38,625.00 per year ($3,218.75 per month).
7th Lease Year, $39,783.75 per year ($3,315.31 per month).
8th Lease Year, $40,977.26 per year ($3414.77 per month).
9th Lease Year, $42,206.58 per year ($3,517.22 per month).
10th Lease Year, $56,250.00 per year ($4,687.50 per month).
11th Lease Year, $57,937.50 per year ($4,828.13 per month).
12th Lease Year, $59,675.63 per year ($4,972.97 per month).
13th Lease Year, $61,465.90 per year ($5,122.16 per month).
14th Lease Year, $63,309.88 per year ($5,275.82 per month).
15th Lease Year, $65,209.17 per year ($5,434.10 per month).
16th Lease Year, $67,165.45 per year ($5,597.12 per month).
17th Lease Year, $69,180.41 per year ($5,765.03 per month).
18th Lease Year, $71,255.82 per year ($5,937.98 per month).
19th Lease Year, $73,393.50 per year ($6,116.12 per month).
20th Lease Year, $75,595.31 per year ($6,299.61 per month).

4. Ticket Tax. The T-Bones will continue to pay to the UG a Ticket Tax for the TURF fund according to the terms of the original agreement with the T-Bones in the amount of $0.50 for each ticket sold by the T-Bones for an event of any kind at the Premises for which a ticket is required for admittance, but excluding: (i) discount tickets sold at discount games for Wyandotte County/Kansas City, Kansas residents; (ii) discounts given to community based non-profit organizations and group sales to such organizations, or other group sales at a discount; (iii) ticket sales for post or pre-season baseball games held at the Premises; (iv) Events held by RED or the UG at the Premises; (v) complimentary tickets given to the media, league officials, or any complimentary tickets made available to dignitaries or others at the request of the UG; or (vi) tickets sold at events where alcoholic beverages are not for sale or consumption.

5. Percentage Rent on Ancillary Events. In addition to the basic rent, the T-Bones shall pay the UG, as percentage rent, twenty-five percent (25%) of the net profit during any lease year for any sporting, entertainment, and other events, meetings and activities other than T-Bones baseball play.

6. Payment of Operating Expenses. The T-Bones are obligated to pay any and all costs (other than capital repairs which the UG is obligated to fund) for operating the Premises (including payment of common area maintenance levied under applicable easement agreements).

7. Real Estate Taxes. If and to the extent that the Premises are not exempt from ad valorem taxes by virtue of the UG's ownership of the Premises (which we will be applying for such property tax exemption status following the UG's acquisition of the stadium), then the UG is obligated to pay such taxes.

8. Payment of Certain Utility Expenses. The T-Bones shall pay all utility charges for electric, water, cable, gas, etc., with the only exception being that the UG shall each bear fifty percent (50%) of the total charges for storm water and sanitary sewer service used in the Premises.

9. Operating Covenant. The T-Bones are obligated to continuously operate a sports complex consistent with the operations of a typical minor league or other semi-professional baseball teams playing professional baseball.

10. Permitted Uses. The Premises are only to be used for a multi-sport complex as found in professional major or minor league stadiums and for other sporting, entertainment, events, meetings and similar activities.

11. UG Reserved Rights
  • High School Baseball - The T-Bones are to make the Premises available for use by each Wyandotte County, Kansas high school baseball team, for regular and post-season games, with a cost per high school team of $250.00 per day for the first day and $500.00 for each additional day of the same calendar year. In addition, each high school team is provided 300 tickets prior to game day. All tickets in excess of 300 will be sold at the gates during the game day, and the TBones shall retain $2.00 of every ticket sold at the gate as reimbursement for costs and expenses incurred by the T-Bones related to the operation of the Premises on the game day, but the balance of the revenues from the gate will be paid by the T-Bones to the high school team.
  • Parks and Recreation Use – The stadium will be made available for use upon two weeks' notice, for use by the UG and/or the UG's Parks and Recreation Department, for community events, recreational programming and other public uses, at a cost equal to the T-Bones's actual expenses in making the Premises available to the UG. For use during the season, meetings will be held early in the year to determine available time slots not to interfere with games.

12. Assignment of Lease / Sale of T-Bones. The T-Bones have the right, without the UG's consent, to assign the Lease to a party which is the purchaser of the T-Bones's baseball team, as long as: (i) the buyer has a tangible net worth of at least $5,000,000.00, and such party is or has been an owner and operator of a baseball stadium or minor league baseball team in a professional or semi-professional baseball league and (ii) the buyer assumes all of the obligations of the T-Bones under the Lease first occurring or accruing from and after the date of assumption. Upon such a sale or transfer, the T-Bones will be released from liability under the Lease going forward. Otherwise, the T-Bones may not assign the Lease or sublet the Premises, without the written consent of the UG.

13. Maintenance and Repairs. The T-Bones agree to operate, repair and maintain the Premises in a safe, clean and attractive condition, including preventative maintenance and routine, non-capital repairs or replacements made in the ordinary course of business for the Premises, including the parking facilities, lighting, scoreboards, concession facilities and the athletic field, in a manner and to the standards consistent with the manner in which the T-Bones maintained the Premises prior to its conveyance to the UG. The UG maintains responsibility for structural repairs or replacements and capital repairs or replacements of the Premises, including the parking facilities, lighting, scoreboards, and concession facilities. The UG has no obligation to perform any maintenance, repair or replacement of CommunityAmerica signs or any part of the athletic field itself. With respect to the scoreboard, the UG is responsible for capital repairs or replacements, but the T-Bones shall be responsible for ordinary repairs and replacements, such as, replacement of individual scoreboard lights.

14. Casualty & Casualty Insurance. If the Premises is damaged or destroyed by fire or casualty, then both the UG and the T-Bones have lease termination rights. Neither party has an affirmative obligation to insure the Premises against casualty, but in the event of any damage to or destruction of the Premises, the proceeds of all hazard insurance on the Premises which is maintained by the T-Bones or the UG belong to the party carrying such insurance.

15. Indemnity; Other Insurance. The lease contains standard indemnification of the UG and in addition otherwise obligates the T-Bone to maintain insurance in customary amounts, including (i) a liability policy of not less than $5,000,000.00, $5,000,000.00 products & completed operations aggregate/ and $5,000,000.00 general aggregate; (ii) coverage for the loss of income and business for a period of at least the next succeeding twelve (12) months; and (iii) worker's compensation insurance.

16. Right to Terminate or Relocate. The UG shall has the right to elect to terminate the Lease following the conclusion of the 2016 Season for any reason and without cause upon giving written notice to the T-Bones no less than fourteen (14) months prior to the commencement of the next season with a termination fee payable as follows: (i) the termination date being upon the conclusion of the 2017 Season - $1,000,000; (iii) the termination Date being upon the conclusion of the 2018 Season or thereafter - $0. In addition, as proposed the UG may elect, in lieu of the termination rights, to substitute for the Premises other premises selected by the UG, and to relocate the T-Bones to another stadium.

17. Remedies. The lease provides the UG with its normal and customary remedies in the event that-Bones default on their obligations.