City Hall 730 Washington Ave Racine WI 53403 262 636-9101 262-636-9570 FAX City of Racine, Wisconsin www.cityofracine.org Frequently Asked Questions about Financing for the Event Center and Hotel Project 1. What does the event center project cost? The Master Project Budget has a range from $51.4 million to $61.2 million. The high range of the cost estimates include deep foundations ( geotechnical engineers do not anticipate needed deep foundations ), an option for 12 added suites, and a high equipment bay to allow large machinery/boats onto the Event Center floor. The project team has made the decision to target a master project budget of $55 million based on an Adjusted Master Project Budget that takes out the deep pile foundations and the high equipment bay. The Adjusted Master Project Budget range is $52.9 million to $59.3 million. The project team’s best estimate of costs, based upon three contractor estimates of conceptual plans, is $55 million. Project costs are broken down, as follows: Event Center $49MM Site Improvements $3.5MM Project Contingency $2.5MM Total Project Costs $55MM 2. What is the financial model for paying for the event center? The financial model spreads costs and payments for the event center across a variety of funding partners. This minimizes the cost burden on any one partner and also keeps taxpayer contributions low. Financial Model for the event center Event Center Cost $49MM Existing Funds from TID Balance Used - $10.6MM Cost of Issuance $1.4MM Total Bond Amount $39.7MM The project team recommends a two-stage bonding process wherein there is an initial bond for 16 years of $39.7 million with an annual payment of $2.5 million. In year 17, the project team anticipates that the unpaid principal be refinanced for another 14 years with an annual payment of $1.8 million. The annual payments for the bond is the area in which the City will be required to find a wide variety of funding sources. The project team recommends the following sources: 1
City Hall 730 Washington Ave Racine WI 53403 262 636-9101 262-636-9570 FAX City of Racine, Wisconsin www.cityofracine.org Initial Bond Refinanced Bond (Years 1016) (Years 17-30) Hotel Incremental Property Taxes $294,000 $294,000* Hotel Occupancy Tax $301,000 $301,000 Cell Tower Lease $30,000 $30,000 Exterior Building Naming Rights Lease $285,000 $285,000 Anchor Tenant Capital Contribution $90,000 $90,000 Ticket Surcharge $127,500 $127,500 Intergovernmental Funds $800,000 City of Racine Levy Contribution $365,000 $365,000 Other Funding Partner Contribution $365,000 $365,000 TOTAL ANNUAL CASH FLOWS $2,700,000 $1,900,000 *Hotel Incremental Property taxes will expire in Year 27 Site Improvements of $3.5 million are expected to be paid from other TID cash flows. Present value (at 4%) of $8.7 million. Project Contingency of $2.5 million would be paid from Intergovernmental Fund balance, if needed. We believe that this contingency is unlikely to be required. 3. Will the events and activities at the proposed event center be affordable? Yes, ticket prices for the proposed anchor tenant, a USHL hockey team, are very affordable — general admission tickets for USHL teams typically range between $8 and $25 depending on the seat location and age of the attendee. General admission ticket prices will be designed to encourage area families to attend. Tickets in suites range from $20 to $50, depending on the package sold. Other events (concerts, trade shows, community events) will be priced depending on the event and seat location. A small ticket surcharge will be added to tickets to cover debt service costs and operations costs of the event center. 4. What is the impact of the event center project on my property tax? For the City to increase its General Fund Debt Service levy (property tax levy) by $365,000 per year ( the proposed dedicated contribution to fund part of the event center ), it would require an increase to the tax rate of $0.1178 per $1,000 of assessed value. For the owner of a typical home valued and assessed at $100,000, the resulting yearly tax increase would amount to $11.78 per year. 5. How many events a year? And what kind? What new events? There is the potential to have between 100 and 175 events each year. This could include sporting events (hockey, basketball, rodeo, etc.), ice-related events (Disney on Ice, skating competitions, etc.), concerts, conventions and special events like proms, weddings and other celebrations. 2
City Hall 730 Washington Ave Racine WI 53403 262 636-9101 262-636-9570 FAX City of Racine, Wisconsin www.cityofracine.org 6. What is the impact to Festival Hall and Memorial Hall? The goal in building a new event center is to add opportunities for the City of Racine to capture events that cannot be held in the already well-functioning Festival Hall and Memorial Hall due to event size, seating, ceiling height or rigging needs. The new event center and the existing Festival Hall and Memorial Hall serve events of different sizes and needs (and budgets), so there will be no major impacts to the existing spaces and more opportunity to partner together to serve large conferences and events. The three event spaces will complement each other and provide a broad range of venue space to fit nearly any event from small gatherings to 3,000+ seat events. 7. What is status of the hotel? The project team has developed a hotel development prospectus that describes the development opportunity and outlines the criteria for selection. This prospectus will be issued to potential hotel developers in July 2017. We have informed nearly 30 hotel developers about the upcoming prospectus issuance and more than 10 developers have signed non-disclosure agreements, which is a first step in participating in a hotel selection process. 8. Will financing the event center preclude completing other projects and needs (i.e., public safety building, Machinery Row)? The event center and hotel project will have its own budget, construction team, designers and developers that would not compete with the continuing work on other projects and needs throughout the City of Racine. The event center is relying on tax increment financing, intergovernmental revenue funds, and other sources of funding that are for economic development purposes that do not preclude the City from responding to, financing and developing in other areas of the City or continuing its work to updates its own public facilities. 9. How will the event center management work? Who will operate the event center? The City has an existing one-year contract with Venueworks, the company that manages the Civic Center properties, that expires in December 2017. During the late summer and fall of 2017, City staff and the Civic Center Commission will evaluate a possible extension to the Venueworks contract with Common Council. If approval is given to move to Phase II, the City would issue a request for qualifications for event center managers with the idea that opportunities to manage all three City event properties would attract a large range of potential operator interest. If approval is not given to move to Phase II, then City staff and the Civic Center Commission will need to make a recommendation about whether or not a competitive bidding process should occur in 2018. 10. How would the event center attract concerts? Part of the event center management would include a talent and promotions booking agent who would be in charge of filling the center with appropriately sized concerts and events for the market. 3
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