A COSTLY WONDER

Dome debt likely to haunt Harris County

By CHRIS MORAN
Copyright 2010 Houston Chronicle

April 12, 2010, 11:48PM

More than a decade after its professional football and baseball teams moved out, the Astrodome carries as much as $32 million in debt — nearly as much as the original cost of construction.

Harris County, which owns the stadium, projects that it will take another generation to complete the $48 million in debt and interest payments to get it off the books.

The debt is so complex and has been refinanced enough times that county financial managers disagree as to how much the county owes. A second estimate put the debt at $19 million.

Either way, local government is on the hook for millions of dollars a year in debt payments and operating costs for a stadium the city has deemed unfit for occupancy.

Debt and interest payments will amount to more than $2.4 million this year, according to a payment schedule for the higher debt estimate. The Astrodome's manager estimates it also will cost $2 million for insurance, maintenance, utilities and security.

The debt likely would have to be reckoned with in any deal to redevelop the Astrodome, said Willie Loston, executive director of the Harris County Sports & Convention Corporation, which the county created to run the Reliant Park complex.

But no deal to restore what once was known as the “Eighth Wonder of the World” is likely to be affected by $32 million, Loston said.

“Practically anything that would be done with the building would be some multiple of that,” Loston said. “It's not enough to make or break a development proposal.”

The rehabilitation of the Astrodome could get a little push today as part of a deal for Houston's next stadium. The Commissioners Court agenda includes a deal that would not only have the city and county contribute $10 million each in infrastructure for a $60 million stadium financed by the Dynamo but also draw a redevelopment zone around the Astrodome.

Fixing the Astrodome is not the purpose of the district, but a surge of development in the area could make the Astrodome more attractive as an investment and destination, according to development officials.

No plans yet

There are no specific plans on what to do with redevelopment money in the Astrodome district or even an indication that any of it will be spent on the old stadium. County officials say it is not likely that redevelopment money would be used for Astrodome debt payments.

Astrodome expenses are covered by a combination of hotel and car rental taxes, parking fees and concessions.

Sports economics Professor Craig Depken of the University of North Carolina Charlotte said using tourist taxes to pay the debt protects the general fund that pays sheriff's deputies and repairs roads.

But without the Astrodome debt, he said, “Either the taxes would be lower on the hotels, which would encourage more people to come to Houston,” or the tourist tax money could be directed toward other projects.

Harris County is unusual but not unique in being saddled with debt for an unused stadium. Olympic Stadium in Montreal was not paid off until two years after the Expos left for Washington, D.C. Three Rivers Stadium in Pittsburgh still was carrying $45 million in debt at the time of its demolition in 2001.

Seattle's Kingdome was razed in 2000, and King County is scheduled to finish paying off its debt in five years.

22 years of payments

Public money will be required to cover Astrodome debt payments for 22 more years, according to county financial projections.

The Astrodome's debt stems from the $60 million cost in the late 1980s of adding 10,000 seats, removing the scoreboard and installing 72 luxury boxes. County commissioners approved the project in an effort to persuade Oilers' owner Bud Adams to keep the team in Houston. The team left town after the 1996 season.

When asked if the expansion looked like a bad investment in retrospect, Precinct 4 Commissioner Jerry Eversole replied, “Hell, yeah!” But Eversole, who was not yet on the Court when the spending was approved, also said it has to be looked at in the context of the times, when two teams were threatening to leave town.

“We couldn't not try to keep the Oilers and we couldn't not try to keep the Astros,” Eversole said.

‘It's an obstacle'

Even Precinct 3 Commissioner Steve Radack, who has criticized publicly funded stadiums as “playpens for millionaires,” agreed that it was a good decision to try to keep the Oilers in Houston.

Radack, who joined the Court shortly after it approved the Astrodome expansion, pointed out that the Astrodome was used by other tenants for years after the teams departed.

“It's not like all of a sudden the Oilers left and somebody turned out the lights,” Radack said.

The Astrodome debt is part of the picture whether it is razed, redeveloped or sold.

“It's an obstacle,” Eversole said, “but that's what plans do, plans overcome obstacles.”

chris.moran@chron.com


nancy@callnancyfurst.com

Madoff trustee says he found $1.5B for fraud victims

By BOB VAN VORIS
Bloomberg News

April 10, 2010, 7:25PM

NEW YORK — The trustee liquidating Bernard Madoff's defunct investment-advisory business reported he has recovered $1.5 billion for former customers and is pursuing $14.8 billion more from feeder funds, Madoff's family and friends and related parties.

Irving Picard told a U.S. bankruptcy judge in an 83-page report on Friday that he has made “significant headway into the investigation of Madoff's fraud.” Picard previously said he had recovered $1.08 billion as of June 30.

Picard said in the report, which details his actions through March 31, that he has filed 14 so-called avoidance actions seeking allegedly improper profits from Madoff's $65 billion fraud, the biggest in history. It is the third such report filed by Picard in the case.

“The Trustee anticipates filing extensive additional litigation based on investigation conducted by the trustee's counsel and consultants,” Picard said in the report.

The liquidation is being overseen by the Securities Investor Protection Corp., or SIPC, a government-chartered agency that charges fees to brokerages. As of Feb. 28, SIPC had paid $602.4 million in customer claims and $141.8 million in administrative expenses.

During March, Picard asked for an additional $656.4 million for customer claims and $152.9 million for administrative expenses, he said in Friday's report.

Picard said that he has reviewed 12,249 customer claims, allowing 2,011 of them for a total of $5.3 billion. Claims totaling about $4.6 billion remain that are in excess of SIPC limits, he said.

Madoff, 71, pleaded guilty last year to orchestrating the fraud and was sentenced to 150 years in federal prison.

Nancy@CallNancyFurst.com

Hurricane chief looks at coast's highs, lows

If Ike Dike is built, he says, it must withstand nature’s worst

By ERIC BERGER
HOUSTON CHRONICLE

April 10, 2010, 10:47PM

More than two years ago Bill Read left his position as meteorologist-in-chief of the Houston/Galveston office of the National Weather Service to direct the National Hurricane Center. Chronicle science writer Eric Berger caught up with Read at the National Hurricane Conference in Orlando, Fla., earlier this month to talk about computer models, the Ike Dike and why communities don't want to put up storm surge markers.

Q: When it comes to hurricane track forecasting, I'm always asked what computer model to trust. What do you say?

A: Actually, the real answer is that the model I would trust is the final product put out by the hurricane center specialists. Because that will take into account, on any given run, their assessment of whether there was an initialization problem with one or more of the models that might be put into that. Trying to, on your own from your couch at home, unless you're trained in model analysis, trying to guess which one of the models on the so-called “spaghetti plot” at best is folly. These guys are trained to do that.

Q: You've talked about simple preventative measures communities can take like installing markers of storm surge levels. And I've noticed some have recently been put up in my neighborhood in Clear Lake along the bayous.

A: Fantastic. I guess Ike broke the code on that.

Q: I wanted to ask you about that, you mentioned some experiences in Galveston County when you lived in League City?

A: I've now forgotten whether it was 2004 or 2005, but the county got approved for a grant to put surge poles in front of public buildings, like post offices and city halls, and none of the jurisdictions in Galveston County would accept them.

Q: Were they concerned about an impact to tourism or economic development?

A: That was my suspicion but no one would admit to that. ... This was the fastest growing community in Texas. It might do some good to scare people away. Now that I've gotten this job I've heard that story from everywhere.

Q: Is it prudent for the Houston/Galveston region to try and harden the coast with a structure like the Ike Dike?

A: I think they have to at least work through the whole process. In that stretch of the upper Texas coast you have more than a million people in the evacuation zones and infrastructure that's important to the entire country, and all of the health care. To examine the feasibility of protecting it is good, because we're reaching the point where evacuating it is darn near impossible. You're not going to see more lanes on 45 or 10 or 290, are you? Not soon. Short of stopping growth in the surge zones what else can you do?

Q: Do you think a dike would actually work?

A: From an engineering point of view everything is feasible. From a can-you-beat-Mother-Nature point of view I'm not sure anything ever works perfectly. If they're going to do it they need to be bold and perhaps take the Netherlands approach. Build it to the 10,000-year event, which is anything. If you build it to a Category 3 hurricane, you're just wasting your time. You've got to build it for anything that can happen. Otherwise people will think they're safe and we'll have another New Orleans situation where we have all of these people in harm's way.

eric.berger@chron.com

nancy@callnancyfurst.com

Halliburton planning to buy Boots & Coots

By MONICA HATCHER
HOUSTON CHRONICLE

April 10, 2010, 12:55AM

Oil field services giant Halliburton said late Friday it would buy Houston-based well-intervention company Boots & Coots in a cash- and-stock deal.

Boots & Coots stockholders would get $3 per share. Based on Boots & Coots' latest filing of outstanding shares, the deal would be valued at about $240 million.

After the merger, Halliburton will combine its existing coiled tubing and hydraulic workover operations with Boots & Coots well intervention services and pressure-control business to create a new product service line.

That Halliburton division focuses on products and services that improve oil well and reservoir performance.

Boots & Coots has become well known for putting out some of the world's largest oil and gas fires.

Jerry Winchester, Boots & Coots chief executive, said in a brief interview Friday that all but one of the company's service lines would be largely complementary with Halliburton, suggesting there would be little impact on the company's some 700 employees.

“It's a great opportunity. We've worked real hard to get here, and this just moves us along that much faster,” Winchester said.

Boots & Coots, which last week lost one of its founding members, E.O. “Coots” Matthews, who died at 86, will keep its famous name, Winchester said.

Halliburton said it would retain Boots & Coots management to lead the new service line.

In a statement, Marc Edwards, Halliburton's senior vice president of completion and production, said Boots & Coots was a natural addition to the company's completion and production enhancement portfolio.

The merger is the latest deal in the oil field services sector, which has seen a wave of such activity over the past year, including several of the sector's biggest companies.

Most recently, Schlumberger said it would merge with Houston-based Smith International in an $11 billion all-stock deal.

Last August, Baker Hughes said it would combine forces with BJ Services for $5.5 billion. The deal is expected to close this month.

Halliburton is the world's second largest oil field services company, with dual headquarters in Houston and Dubai. It has 50,000 employees.

The deal for Boots & Coots, still subject to regulatory and shareholder approval, is expected to close by summer, the companies said.

Boots & Coots' stock price closed at $2.35 on Friday — before the deal was announced — down 1.3 percent. Halliburton shares closed at $31.57, down 9 cents, or 0.3 percent.

monica.hatcher@chron.com

nancy@callnancyfurst.com