Convention Center and Hotel Complex
Components: Convention Center, 500-room Hotel
Project Value: $240 million
SAG was the financial advisor to the Village of Schaumburg, a Chicago suburb, regarding the financing of a hotel and convention center under a tax exempt structure. SAG managed the pre-development phase of the 500-room full service hotel and convention center with 150,000 sf of function space. SAG led the transaction process addressing issues ranging from development team selection to bond structuring, cash flow modeling, rating agency and bond insurer presentations, and contract negotiations. SAG worked closely with the legal team and represented the Village on transaction documents, including the qualified management agreement, technical services agreement, operator loan (key money), pre-opening agreement, room block agreement, official statement, trust indenture, and other transaction related agreements.
The tax-exempt bonds were structured to be repaid by a mix of sources. The primary source of repayment was to be generated by hotel profits and the incremental taxes generated by the complex (hotel, sales and food & beverage taxes). Additional resources were allocated to the bonds to provide for shortfalls during the hotel’s stabilization period and credit enhancement. These included a privilege tax, telecommunications tax, real estate transfer tax and food & beverage tax. To add further credit enhancement, the Village elected to issue the bonds as general obligations of the Village, even though the Village did not levy property taxes. However, property taxes would have to be levied if the above primary revenue sources were insufficient. The convention center and hotel opened in 2006.