1 Convention Center Authority Republican Policy Group Presentation March 23 rd 2015

2 Meeting Agenda Approval of the Previous Minutes Approval of the Previous Minutes Discussion of the Convention Center Lease & Agreement with the State Discussion of the Convention Center Lease & Agreement with the State Implications for Future Lease Arrangements Implications for Future Lease Arrangements Status of APRA Request Status of APRA Request Discussion of Next Meeting Discussion of Next Meeting

3 Lease and Agreement Lease & Agreement Lease & Agreement –Original signed November 19 th 1991 –Second Amendment signed April 26, 2005 “The State has agreed to lease the ‘Project’ from the Authority pursuant to the terms and conditions set forth in this Agreement”

4 Description of Property Lease and Agreement includes Lease and Agreement includes –610,000 ft 2 convention center facility including parking for 720 automobiles –Garage facilities of additional 1,680 spaces –320,000 ft 2 hotel/office building –300 hotel rooms –50,000 ft 2 commercial office space

5 Requirements of Agreement “The Authority agrees to lease to the State, and the State agrees to take and hire from the Authority, the Project” “The Authority agrees to lease to the State, and the State agrees to take and hire from the Authority, the Project” Lease begins on the date of bond issuance Lease begins on the date of bond issuance Lease “shall terminate on the date on which all... Bonds and Notes secured by this Agreement... have been paid in full” Lease “shall terminate on the date on which all... Bonds and Notes secured by this Agreement... have been paid in full”

6 Requirements of Agreement State Payment of Rentals State Payment of Rentals –“An amount which shall equal Debt Service with respect to all Outstanding Bonds” –“An amount necessary to provide for payment of the Operations & Maintenance Expenses” –“An amount necessary to restore Debt Service Reserve Fund” –“An amount necessary to restore the Operating Reserve Fund”

7 Requirements of Agreement State Additional Rent State Additional Rent –“Amounts sufficient to pay all other obligations, charges, expenses or liens payable by the Authority” Minimum Rentals Paid by the State Minimum Rentals Paid by the State –“Payment of the principal & premium and interest payable on all Outstanding bonds” –“All other obligations, charges, expenses by the Authority”

8 Cost of the Project Best Available Estimate in 1991 Best Available Estimate in 1991 –$255,000,000 cost –1987 original cost estimate of $100 million Additional Costs Additional Costs –“In the event the Cost of the Project shall exceed amount available, the State shall pay ‘Additional Rent’ required” –Alterations to the Project are at the discretion of the Authority and shall be “promptly paid by the State as Additional Rent”

9 Lease Agreement Legality Constitutionally Legal Constitutionally Legal –A General Assembly cannot encumber a future General Assembly –The Lease Agreement Stipulates  “Payment shall be subject to and dependent upon appropriation by the General Assembly” Debt Issued Debt Issued –Revenue bonds by the Authority –No need for voter approval  Not General Obligation Bond

10 Default & Termination Default Default –Failure by the State to pay according to the Lease & Agreement Termination Termination –Lease & Agreement is terminated upon the failure of the State to appropriate funds to the Convention Center Authority

11 Remedies of the Authority Re-enter and take possession of the Project Re-enter and take possession of the Project –Holding the State liable for all Rentals & other amounts due Exclude the State from possession of the project and sell or lease to another party Exclude the State from possession of the project and sell or lease to another party –Holding the State liable for all Rentals & other amounts due

12 Additional Provisions State Purchase Provision State Purchase Provision –All Outstanding bonds, notes, and obligations must be fully paid –The State may purchase the Project from the Convention Center Authority for $1

13 Providence Development Construction Construction –Funded solely by the Authority through debt Debt Debt –Paid by every tax payer for last 2 decades –No vote, still have hundreds of millions to pay Legality Legality –Completely legal –Few need to sign the deal for implementation

14 Leasing Arrangements Entities Can Issue the Debt Entities Can Issue the Debt –Issued Debt and thereby claim fully funding the construction of the Project with private capital Rhode Island Residents Rhode Island Residents –Paid for the construction of the CCA Project –Annual appropriations for debt service are in excess of $20 million Only two individuals signed the document forcing $454 million of state spending Only two individuals signed the document forcing $454 million of state spending –From

15 Leasing Arrangements Rhode Islanders Should be Wary of Lease Arrangements Rhode Islanders Should be Wary of Lease Arrangements –Seek stronger protections in the law against creative financing schemes –Hold those accountable for entering into such arrangements Potential legislative opportunities Potential legislative opportunities –Taxpayer protections

16 APRA Informational Request Informational Request –Copies of the request are available Expectation of Receipt Expectation of Receipt Comparison to other Convention Centers in our geographic area Comparison to other Convention Centers in our geographic area

17 Committee Member Concerns Provided Documentation Provided Documentation Questions of the Committee Questions of the Committee Areas of Further Inquiry Areas of Further Inquiry Additional Concerns Additional Concerns

18 Upcoming Meeting Additional week off Additional week off –Need additional time to obtain and read APRA documentation –Next meeting April 13 th at 3:00 in the House Minority Office