1. BCEC Context, Convention Center Financing and BCEC Westin Hotel Presentation to The Convention Partnership
Presented by Kairos Shen, BRA
Frederick Peterson, MCCA
Johanna Storella, MCCA
James Sult, Piper Jaffray & Co.
Howard Davis, MCCA
May 24, 2010

2. Agenda Community Context BCEC Financing: Case Study
BRA’s Vision for the South Boston Seaport District,
Existing/Proposed Development Plans and Land Ownership
Transportation Plans/Future Considerations
South Boston and Fort Point Neighborhoods
BCEC Financing: Case Study
Overview: Financing for Other Convention Center Expansions
BCEC Westin Hotel: Case Study 2

3. Community Context Kairos Shen, Chief Planner, BRA
Fred Peterson, Director of Facilities Operations, MCCA 3 3

4. MCCA and Community Dialogue
Objectives
Begin the process of jointly identifying neighborhood & community concerns
Work together to explore potential solutions
Respect existing uses in the area and how any expansion weaves into the fabric of the community
Planning Documents
Seaport Public Realm Plan
BRA 100 Acre Plan
City of Boston/ BRA Crossroads Initiative
Current zoning in and around BCEC
BRA East/West First Street planning – rezoning efforts 4

5. Community Concerns – What We’ve Heard
Design
Campus-style
Appropriate aesthetic
Height; scale; massing & finishes
Open Space
Types of uses
Onsite location(s)
Connectivity to surrounding areas (e.g. 100 acres)
Pedestrian Impact
Access
Connections to neighborhoods and waterfront
Streetscape improvements
Traffic calming elements 5

6. Community Concerns – What We’ve Heard
Transportation
MBTA
D Street/Summer Street or on-site service
Silver Line
CSX Track 61 uses
Cypher St connection from A St to Pappas Way
Pedestrian connections & vehicular uses
“Blue Highway” – water ferries & shuttles
Parking & Marshalling
Locations, structures and loading docks
Shuttles & trucks servicing each building
South Boston Bypass Road
Spanning over the roadway
Current & future uses (Hazmat truck route) 6

7. BCEC Financing: Case Study
Johanna Storella
Chief Financial Officer, MCCA 7 7

8. BCEC Construction and Financing
Project Funded at State and Local Level:
Commonwealth Responsibilities
Chapter 152 authorized the Commonwealth to issue $694.4 million in special obligation bonds to cover Boston, Springfield and Worcester projects
Convention Center Fund established to secure and provide payment of State bonds
City of Boston Responsibilities
Under Chapter 152, City required to provide not less than $157.8 million for BCEC site acquisition and preparation
Chapter 152 also authorized the City to issue bonds to fund this obligation, and to increase the room occupancy tax to pay bond debt service
Funding plan designed to place the tax burden on the visitors rather than the citizens of the Commonwealth 8

9. Site Acquisition & Site Preparation Funding9

10. BCEC Project Funding 10

11. Chapter 152 – Convention Center Fund Revenue Sources
Convention Center Financing Fee, 2.75% of the total room rent
Commonwealth’s existing 5.7% hotel room occupancy tax
Current hotel rooms located in BCCFD
New hotel rooms located in Boston or Cambridge
New hotel rooms located in the SCCFD
Springfield’s 4% local hotel room occupancy tax for new rooms in the SCCFD
Commonwealth’s existing 5% tax upon sales at new retail shops in BCCFD and SCCFD
5% surcharge on the ticket price for any land or water based tour in Boston
State’s share of the vehicular rental surcharge, $9
$2 per day surcharge on parking at any facility constructed as part of the Boston, Springfield or Worcester projects 11

12. Chapter 152 – City of Boston New Revenue Sources
Anticipated 4% local option room occupancy excise tax on new hotel rooms
Sale of 260 hackney licenses
City’s share of the vehicular rental surcharge, $1 12

13. Flow of Funds: Convention Center Fund – FY 200913

14. Distribution of Funds: Convention Center Fund – FY 2009
8.9%
43.7%
16.3%
12.3%
11.3%
62.5%
5.2%
16.6%
23.2% 14
Example: Fiscal Year 2009

15. Overview: Financing for Other Convention Center Expansions
James Sult, Piper Jaffray & Company 15 15

16. CAPITAL FUNDING SOURCES
Hotel and F&B Related
Taxes
Broad Base Occupancy
Tax
Occupancy Tax on New
Hotels
Flat Fee per Occupied
Room
Broad Base F&B Tax
Target District F&B Tax
Other Tourism Related Taxes
Rental Car Surcharge
Taxicab Fees
Tourist Activity
Surcharge
Direct Government Support
Broad Base Sales Tax
Pledge
State Debt Obligation (GO)
City Debt Obligation 16

17. PHOENIX CONVENTION CENTER
Ownership / Operations
Owned and operated by City
Operating Funding Sources
Operating revenues
Operating deficit funded from City Excise Tax Fund
Capital Financing Structure (Expansion)
$300,000,000 State contribution
Issuance of State backed bonds
$300,000,000 City issued bonds
Backed by pledge of Citywide excise taxes
Facility (expanded)
Original facility opened in 1969
Expansion completed in December 2008
502,500 SF of exhibition space
150,000 SF of flexible meeting space
Three ballrooms totaling 119,000 SF 17

18. SAN DIEGO CONVENTION CENTER
Ownership / Operations
Owned by City
Operated by San Diego Convention Center Corporation (City controlled)
Land owned by San Diego Unified Port Authority (ground lease to City)
Operating Funding Sources
Operating revenues
Operating deficit funded from City General Fund
Capital Financing Structure
(Expansion)
$205,000,000 Lease Revenue Bonds issued by Convention Center Expansion Authority
Backed by annual City lease payments
$4,500,000 annual debt service support payment from Port to City for 20 years
Facility (expanded)
Original facility opened in 1989
Expansion completed in 1998
615,701 SF of exhibition space
204,114 SF of flexible meeting space
Further expansion and new hotel under consideration 18

19. PENNSYLVANIA CONVENTION CENTER
Ownership / Operations
Owned and operated by the Pennsylvania Convention Center Authority
Authority is a component unit of the City of Philadelphia
Land owned by City (ground lease to Authority)
Operating Funding Sources
Operating revenues
Authority receives approximately 70% of a 6% City-wide hotel occupancy tax
Capital Financing Structure (Original)
$277,195,000 Lease Revenue Bonds issued by the Authority
Backed by annual City lease payments equal to debt service
City and State grants
State - $185 million
City - $42 million
Expansion primarily funded by the State
Facility (expanded)
Original facility broke ground in 1993
Expansion expected completion
March 2011
700,001 SF of exhibition space
246,000 SF of meeting space
60,000 SF ballroom (92,000 SF total) 19

20. WASHINGTON DC CONVENTION CENTER
Ownership / Operations
Owned and operated by the Washington Convention Center Authority
Independent authority of the District government
Operating Funding Sources
Operating revenues
4.45% district-wide hotel occupancy tax
1% district-wide F&B tax
1% tax on vehicle rentals
Capital Financing Structure
$524,460,000 Dedicated Tax Revenue Bonds issued by the Authority in 1998
Backed by revenues described above
Facility
Opened March 2003
725,000 SF of exhibition space
250,000 SF of meeting space
52,000 SF ballroom 20

21. Capital Funding Sources by City21

22. OWNERSHIP AND OPERATIONS
Operations Funding
Independent Authority (State)
Boston
Atlanta
Chicago
New Orleans
Independent Authority (City)
Philadelphia
Washington DC
Las Vegas (Clark County)
City Controlled
San Diego
San Francisco
Phoenix
Dallas
Denver
Orlando (Orange County)
Dedicated Tax Revenues (operations)
Boston
Philadelphia
Washington DC
New Orleans
Dallas
Direct City Funding (operations)
Phoenix
San Diego
San Francisco
Dallas (shortfalls)
Las Vegas (room tax revenues)
Denver 22

23. BCEC Westin Hotel: Case Study
Howard Davis
Director of Capital Projects, MCCA 23 23

24. RFP to Groundbreaking – 5 years
1999:
RFP Issued
2000 – 2002:
Development Agreement and Lease Signed
Starwood/Carpenter & Company
Design and Permitting
2003:
New Developers
New Design – Two Phases
2004:
Groundbreaking 24

25. Since 2004 Groundbreaking 2006: 2007: Present
Westin Opens for Business
2007:
Hotel Sold - $302 Million
Present
Operations Successful
No Firm Expansion Plans 25

26. Hotel Rent Base Rent Percentage Rent Transaction Rent Fixed Schedule
Commences 2013
Percentage Rent
% of Gross Revenue
Transaction Rent
% of Sales/Refinancing Proceeds
Approximately $1 Million to MCCA from 2007 Sale 26

27. Room Block Agreement Blocks of Rooms Available to MCCA
At Not-to-Exceed Rates
# of Available Rooms
Function of How Far in Advance Rooms are Booked
48 Months and Beyond: 75% Rooms
Less than 12 Months: 0% Rooms 27

28. MCCA/Westin Relationship28

29. Original Capital Structure
$121,000,000 Private -1st Mortgage Debt
$ 49,000,000 Private - Developer/Tenant Equity
$170,000,000 Total – Private Sources
$ 18,000,000 MCCA – Infrastructure, Etc.
$ 15,000,000 Public HUD Loan – City of Boston
$ 33,000,000 Total – Public Sources
$ 203,000,000 Total – All Sources 29

30. Enhanced Investor Returns
Favorable Ground Lease from MCCA
No Annual Rent Payments for 7 years
Structured Property Taxes – City of Boston 30

31. Conclusions: BCEC Westin Hotel
Hotel Was Needed and Successfully Developed
7 Year Process
Not Feasible Without Public Contributions
Approximately $33 million – 16% of Total
Today, Required Public Contribution Much Higher
In Washington, D.C., Approximately 50%
Hotel Sold Within Year of Opening
Very Significant Profit for Developer 31