Chula Vista, the San Diego Unified Port District, and the Bayfront Authority Close on Complex Public Private Partnership

Served as P3 counsel and bond counsel on an extremely complex public private partnership including a revenue bond financing secured by several streams of tax revenues and public agency payments. 

In May 2022, after nearly five years representing the City of Chula Vista and the Chula Vista Bayfront Facilities Financing Authority (the “Bayfront Authority”) as legal counsel in connection with the development and financing of the Gaylord Pacific Resort Hotel and Convention Center, the firm guided Chula Vista, the San Diego Unified Port District (the “Port District”), and the Bayfront Authority through a successful concurrent closing of the real estate, construction and development, and public and private financing contracts.  The public financing component of this $1.1 billion P3 project currently consists of $385 million in Revenue Bonds issued by the Bayfront Authority and directly placed with JPMorgan Chase Bank and Sumitomo Mitsui Bank.  The Revenue Bonds mature in five years and include a scheduled drawdown feature enabling the Bayfront Authority to save millions of dollars in accrued interest during the construction period.  The Revenue Bonds are secured by three distinct revenue streams: 

• Lease payments by Chula Vista under a Facility Lease with respect to property owned by the Port District, site leased to the Bayfront Authority, subleased to Chula Vista, and sub-subleased to the developer for construction and operation of the convention center component of the Project. The City’s lease payments are limited to specified revenues generated by the hotel and convention center and certain other properties in the Chula Vista Bayfront Master Plan area, including transient occupancy taxes, property tax increment, and sales taxes, as well as scheduled payments to be made by the city.  Chula Vista’s general fund is not otherwise on the hook for the lease payments. 
• Port District payments under a support agreement consisting of scheduled annual payments and payments derived from specified lease revenues generated from Port District real property leases in the CVBMP area,
• Special Tax payments to be made under a loan agreement by the Bayfront Project Special Tax Financing District formed under provisions of the Chula Vista Municipal Code which incorporate portions of the Mello-Roos Community Facilities District law. The Special Tax payments are calculated as an additional room tax in the same manner as Chula Vista’s transient occupancy tax, applied to the Gaylord Pacific Hotel and certain other properties in the CVBMP area.

The Gaylord Pacific Project financing also included $700 million in debt financing and $90 million in equity (including contributions by the hotel operator, Marriott International) secured by the hotel developer.  A joint venture formed by M.A. Mortenson Company and McCarthy Building Companies, Inc. was selected as the general contractor for construction of the project.  The developer’s debt and equity financing, the construction contract, the hotel ground lease, the three convention center leases, and the Bayfront Authority’s public financing were all executed and delivered through a concurrent closing on May 26, 2022.