City of Gilroy

Project:
Educational Theme Park Financing Program

Project Highlights

The City of Gilroy was originally approached in 1998 with the concept of developing an educational horticulture and entertainment theme park by a newly-formed non-profit controlled by a successful local businessman. With the project costs estimated at $150M, over $100M of which was already spent from donations to the non-profit, the City was asked to develop a financing plan that allowed for the issuance of tax-exempt project revenue bonds secured by the park’s operations. NHA Advisors developed a financing plan that included both senior and subordinate project revenue bonds that were sold in early 2001.

Unfortunately, the tragic events of September 2001 caused the theme park industry to record historically low attendance, and the park had difficulties making debt service payments. NHA Advisors worked with the City to develop a financing plan that had a significant portion of the bond holders tender their bonds as part of a City acquisition of the non-profits assets (primarily property). Proceeds from the City’s purchase were used to defease the majority of the bonds early with the balance of the bonds called within a few years. The park is now able to operate without the debt burden and has started making payments to the City out of a portion of its annual profits from operations.

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