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2 <br /> Financing options for an arena may range from the City issuing revenue bonds or general <br /> obligation (G.O.) bonds or a lease/purchase agreement which requires an annual <br /> appropriation from the City Council. A bond issue based purely on the revenues of the <br /> arena is one option. A G.O. issue requires a referendum which authorizes a tax levy to <br /> pay the debt. Under a lease/purchase scenario, the EDA could issue revenue bonds similar <br /> to those issued to finance the construction of City Hall. Because this requires the annual <br /> appropriation of funds, it is not necessary for a referendum. The EDA merely repays the <br /> bonds through lease revenues from the arena. If the revenues are insufficient, other <br /> revenue sources must be identified. If other sources are not available, a tax levy would be <br /> necessary. <br /> Another lease/purchase option is similar to how the Fire Station and Public Works <br /> buildings were financed. These do not involve the EDA but are annual appropriations <br /> from the City Council. The City relies on the revenue stream from the arena, and, if this <br /> proves insufficient, other sources of funds must be identified. The annual appropriation <br /> enables the City to terminate this lease if ice arena revenues and/or other financing sources <br /> are insufficient. This may result in a costly financing option due to the City's ability to <br /> walk away from the project if revenues are insufficient. <br /> In order to proceed with a bond issue, an independent feasibility study must be completed <br /> to successfully market the bonds. Such a study would likely cost $15,000 and the results <br /> of which may find that the project is not self-supporting. The ice arena committee is <br /> requesting that the EDA consider financing this study. If a bond issue is not pursued, the <br /> Hockey Association would repay the EDA for the cost of this study. <br /> Finance Director Lori Johnson has gathered names of firms that have done ice arena <br /> feasibility studies for projects that our fiscal consultant, Springsted, Inc., has reviewed. <br /> These companies include: <br /> Marquette Partners <br /> Boonestroo Rosen Anderlick and Assoc. <br /> Midwest Hospitality Analysis <br /> Real Estate Appraisers Advisors <br /> For additional information on this topic, please refer to the attached correspondence from <br /> the ice arena group. <br /> Action Requested <br /> The EDA is asked to fund an independent feasibility study on a second ice arena. This is a <br /> cost that can eventually be refunded through a bond issue. However, if the study <br /> determines that revenues cannot support an arena, the Hockey Association would repay <br /> the EDA for its costs associated with the study. <br /> 411 <br />