LOS ANGELES — The National Football League's return to the Los Angeles area is a credit positive for Inglewood, Calif., says Moody's Investors Service.
The NFL voted Tuesday to let St. Louis Rams relocate to the Los Angeles-area city of 110,000 where a $1.8 billion stadium is planned on a 238-acre former horse racing track as part of an entertainment district and mixed-use development.
In the Jan. 14 comment, Moody's Senior Analyst Alexandra Cimmiyotti pointed to estimates from city consultant HR&A Advisors that Inglewood could gain $18.7 million to $28 million in new annual revenues over a 16-year period.
The stadium is expected to be completed in 2019.
"The city is not taking on the burden of financing the stadium or the risk that comes with it," Cimmiyotti said in an interview.
Inglewood's agreement with the developer Hollywood Park Land Co. does not involve public funds for stadium construction or essential infrastructure, Moody's said.
Forecasted annual revenues of $21 million in stadium-related revenues equate to about 25% of the city's fiscal year 2015 general fund budgeted revenues of $80 million, according to Moody's.
Inglewood would collect a 10% admission tax on NFL tickets sales and non-NFL events. The second most lucrative source of tax revenue would come from property taxes on the $1.8 billion stadium, Moody's said. The city also benefits from property taxes on the proposed commercial development, bed taxes on the hotel and parking taxes.
The stadium's private financing and the developer's upfront payments for essential infrastructure, including water, sewer and street upgrades factored into Cimmiyotti's analysis, she said. Any annual excess cash flow generated above $25 million in city tax revenues from stadium would be reimbursed to the developer to pay for infrastructure improvements, however.
Moody's upgraded Inglewood's issuer rating February 2015 from A2 to A1. It also upgraded the rating on $86 million in lease revenue and pension obligation debt from Baa2 to Baa1.
Last year's upgrade was attributed to an improving economy and more stability in city finances, she said.
The stadium and mixed-use project is a long-term economic benefit that Moody's will continue to monitor and evaluate, but would not be likely lead to a rating change by itself, she said.
