Government building concept for Columbia Capital Case Studies

Case Study 01

General Government

In late 2015, the St. Louis County Executive requested that the St. Louis Convention and Visitors Commission consider authorizing St. Louis County to use the excess revenues of the 3.5% hotel/motel tax trust fund to expand County-owned soccer facilities adjacent to Creve Coeur Park. The expansion would allow the facility to host a variety of youth soccer tournaments, and as a result attract families to the County and bring in new hotel/motel tax revenue.

The Convention and Visitors Commission approved the County Executive’s request in December of 2015. The Commission directed to County to develop a plan of finance to issue bonds that would provide $14 million for the project, have debt service not to exceed twenty years, and structure annual debt service payments of no greater that $1.4 million. As financial advisor to the County, Columbia Capital developed a plan of finance meeting the County’s goals.

In addition to hosting youth soccer tournaments, primarily during weekends, the soccer facility is used by local soccer clubs during the week for regular training and practice. Columbia, along with the County’s bond counsel, advised the County that due to potential “bad use” under federal tax law related to soccer tournaments and soccer clubs, a portion, or the entirety, of the bonds would have to be issued on a taxable basis. However, several of the soccer clubs scheduled to use the facility were organized as 501(c)(3) entities, and therefore a portion of the bonds could be classified as 501(c)(3) bonds and would be able to be issued on a tax-exempt basis.

Columbia worked with the County, and bond counsel, to arrange for a TEFRA hearing and the other necessary steps to have the bonds qualified under Federal tax law as qualified 501(c)(3) tax-exempt bonds.

Because a portion of the bonds would still have to be issued on a taxable basis, Columbia advised that the financing should be structured so that the more costly taxable bonds amortize first, followed by the less costly tax-exempt bonds. Columbia worked with tax counsel to determine the correct sizing for both the taxable and tax-exempt portions to match the expected use of the facility.

The bonds were sold on a competitive basis during the second week of March 2016. Columbia structured the final cashflows to conform to the parameters provided by the Convention and Visitors Commission, and to comply with tax law.