Page 375 - FY 2021-22 Proposed Budget

STAPLES ARENA FUNDING AGREEMENT RECONCILIATION

The Staples Sports Arena is a sports and entertainment complex located adjacent to the Los Angeles Convention
Center. The City entered into various agreements with the Arena Developer to advance approximately $70 million
towards the project. Pursuant to the Gap Funding Agreement between the City and the Developer, the Developer is
obligated to fully offset the City's costs for debt service on bonds issued for the Arena, reimbursement for property
conveyed to the Developer, and compensation for loss of interest earnings on cash advanced toward the project. The
Agreement specifies certain credits that will offset the Developer's obligations to the City. This schedule serves as an
accounting of the Developer's obligations and offsetting credits.

Actual Estimated Budget
2019-20 2020-21 2021-22
OBLIGATIONS
$ 3,467,844 $ 3,458,000 Arena Debt Service *............................................................... $ 3,452,789
730,000 730,000 City Proceeds Obligation......................................................... 13,825,000
451,830 452,000 City Property Obligation........................................................... 451,830
$ 4,649,674 $ 4,640,000 Total Obligations.................................................................. $ 17,729,619

CREDITS
$ -- $ 2,619,000 Excess Allowable Credits from Prior Period............................ $ --
6,322,318 400,000 Gross Receipts from Staples Arena Admissions Fee.............. 4,000,000
227,619 182,000 Shortfall Prepayment per Amendment No. 1........................... (598,242)
1,000,000 50,000 Incremental Convention Center Parking Revenue................... 500,000
-- -- City Proceeds Payment........................................................... 13,825,000
118,422 49,000 Interest Earnings..................................................................... 28,436
$ 7,668,359 $ 3,300,000 Total Credits........................................................................ $ 17,755,194

$ (3,018,685) $ 1,340,000 Obligation/(Credit) **............................................................... $ (25,575)

*Debt payments are budgeted within the Capital Finance Administration Fund, with the Staples Arena Trust Fund as the source of funds.
Actual cash payment to Trustee may vary from budgeted amount due to interest earnings.
**The 1998 Gap Funding Agreement authorized the Staples Developer to offset the repayment obligations with certain allowable credits.
When the allowable credit exceeds the obligation amount, the Staples Developer is allowed to carry the credit forward in the following
fiscal year. In 2003, Amendment No. 1 to the Gap Funding Agreement authorized the Staples Developer to prepay its repayment
obligations. In exchange for the City's agreement to modify the credit enhancement requirements, the Staples Developer paid the City
$16.5 million, comprised of $14.7 million for estimated shortfalls and $1.8 million for additional inducement.

348