Oklahoma City sets financing team for arena bond sale

Goldman Sachs (GS) will lead a bond sale to finance the replacement of Oklahoma City's Paycom Center, the home of the National Basketball Association's Thunder, at a cost of at least $900 million.

Co-managers, who were also selected from 16 responses to a request for proposals issued in November, are Morgan Stanley (MS) and BOK Financial (BOKF), according to Brent Bryant, the city's chief financial officer.

"Every proposal we received everybody was saying? the most efficient way to do this financing is to do one big bond issue," he told The Bond Buyer.

Bryant initially considered the use of privately placed tax anticipation notes, structured like a line of credit, to bridge the gap until sales tax collections earmarked for the new arena begin in 2028.

In December 2023, Oklahoma City voters overwhelmingly approved a six-year extension of a Metropolitan Area Projects (MAPS 4) one-cent sales tax beyond its April 1, 2028, expiration date. The city has projected the tax will raise nearly $976.3 million during the six-year period based on annual growth of 1.79%.

The city will also contribute $78 million in MAPS 4 funds that had been allocated to the city-owned Paycom Center, while the Thunder, which has played there since 2008, is putting in $50 million.

Bryant, who was recently named an assistant city manager overseeing five city departments, said an estimated $787 million of mostly tax-exempt sales tax revenue bonds, carrying serial maturities to 2034, would be issued through the Oklahoma City Public Property Authority.

The deal's timing will depend in part on developments related to tax-exempt financing or stadium bonds in Congress, he added.

"Our preference would be to go through with the financing in the latter part of the calendar year, but if political conditions or marketing conditions are such, we want to be able to quickly get the bonds issued," Bryant said.

The municipal bond market is worried that tax-exempt debt or specific types of financings could be targets as Congress searches for ways to pay for the costs of extending the Tax Cuts and Jobs Act and additional tax cuts sought by President Donald Trump.

Other members of the arena financing team are PFM Financial Advisors and co-bond counsel Williams, Box, Forshee & Bullard and The Public Finance Law Group, according to Bryant.

Oklahoma City Mayor David Holt made the case for replacing the 18,000-seat arena, which opened in June 2002, in his 2023 State of the City address.

The city council in May approved a development agreement, which included the team's 25-year commitment to play in the new arena.