In August 2008, we told you about the Sports Authority's money problems. An insurance company that backed $117 million worth of bonds used to build Reliant Stadium ran into trouble. The loan then went to another bank, which wants its money in five years instead of the 30.
It raised the interest rate two percent, adding another $2 million a year, which is $17,000 a month.
"Fortunately, the Sports Authority is doing well," said Sports Authority Chairman J. Kent Freidman back on August 8 of last year. "Income is up. Our expenses are down. And we're not gonna have a problem paying that."
But in November, the real payments begin -- $12 million apiece twice a year for five years. And despite efforts to delay them, the bank is holding firm.
"The worst case scenario is that we wouldn't be able to pay the bonds, in which case they'd be in default, which would require the bond insurance company, MBIA, which is frankly the catalyst that caused these problems, would have to step up and pay the bonds," said Friedman.
But that is worst case, and the Sports Authority says it has $55 million in reserves, plus enough revenue to make the payments. Yet there have been discussions about getting help from the county.
"There were some ideas floated," said Harris County Judge Ed Emmett. "But no, they've not come officially to the county asking for a loan."
But if the bank won't budge and the Sports Authority can't make the payments, who pays the bill? Nobody is sure of that. Public money could end up footing the bill.
It may be semantics, but Judge Emmett says it won't be from property taxes.
"I cannot imagine a circumstance where taxpayers' money would ever come into it," said Emmett.
None of this affects Minute Maid Park and the Astros, Toyota Center and the Rockets, or even the Texans. But the bottom line is that whatever happens, the final cost of Reliant Stadium is going to be far more than was expected before the economy got sacked.
The current financial issues have nothing to do with the planned construction of the new professional soccer stadium. It applies only to Reliant Park.
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