Financing
The Ford Center will serve the entire region and spur growth in the Downtown area. In nearly two dozen public forums held across the City, citizens expressed support for the idea but worried that it could lead to higher property taxes. By taking advantage of existing revenue streams and the City’s Tax Increment Financing (TIF) district, Evansville won’t have to add to local property taxes to build the Arena.
The project cost is $127.5 million for design and construction. That cost will be supported by $32.5 million in “current” funds (meaning those available from 2009 to 2012) and $95 million in long-term financing.
That financing structure will not be reliant on general property taxes and will not be a general obligation of the City. It will work in much the same way as the plan that was used to renovate The Victory Theatre.
The Evansville Redevelopment Authority will issue bonds and use the proceeds from those bonds to support construction of the Arena. It will act as a landlord, leasing the facility to the Evansville Redevelopment Commission, which will be the tenant.
The Redevelopment Commission will be responsible for operating the building, will receive the revenues from those operations and dedicated tax revenues and will pay rent to the Redevelopment Authority. The Authority will use those payments to pay the debt service on the bonds over 30 years.
Since the project will not rely on property taxes, three other main sources of public support for the arena will be used. They are the Food & Beverage Tax, riverboat revenues and the Downtown Development Area TIF. None of these funds are available to pay regular operating expenses of the City, so using them will not affect the City’s operating budget.
- The Food & Beverage Tax has been collected on restaurant sales – like a sales tax – since the mid-1980s. It’s currently being used to pay bonds for the Evansville Auditorium and Convention Centre and will be used for that purpose through 2018.
- The Casino Aztar riverboat generates two types of revenue for the City. It pays gaming and admissions taxes and also will make lease payments. The long-term financing plan counts on future riverboat payments, but will not use existing riverboat fund balances. At present, riverboat revenue is being used to pay the 2003 Zoo bonds and for other capital items.
- The Downtown Development Area Tax Increment Financing (TIF) District, established in 1984, reinvests a portion of Downtown property taxes in Downtown development projects. Funding projections for TIF are conservative and limited to existing building values. Taxpayers in the TIF district pay the same property tax rate as those outside the district.
The goal for these sources of funding is to generate an average of 150 percent of the amount needed to make the bond payments. This means we will have roughly $1.50 in revenue to cover every dollar of debt.
The financing plan does not take into account any possible secondary methods of financing including naming rights, suite sales, the sale of Roberts Stadium or the property on which it sits, and does not take into account growth in the Downtown TIF District, though its assessed value certainly will increase.
For more detail, read the finance presentation.
