HomeMy WebLinkAbout2012-10-10 12-330 ORDERCOUNCIL ACTION
Date: October 10, 2012
Item No._ " 1Z 3 3 0
Item/Subject: Order Establishing Final Scope of the Cross Insurance Center
Responsible Department: Executive
Commentary: In November 2010, the City Council established an overall project budget for
the City's new Arena/Meeting Complex of $65 million. This benchmark was established based on
conservative estimates of gaming revenues, Downtown TIF funds and debt service costs. The
projection by the Finance Director demonstrated sufficient capacity to support approximately $65
million in debt or a maximum of $3.7 million in annual debt service. These projections were
based on modest growth in gaming revenues as well as conservative estimates on interest paid
on the debt. Final construction estimates exceeded $65 million which resulted in scope
reductions including a reduction in the Furniture and Equipment, delay finishing the suites and
meeting rooms until naming rights were sold, and look for project savings to finish out the
parking facilities.
In July 2012, the City sold $56.5 million in bonds. Due in large part to elimination of taxable debt
and a favorable borrowing climate, total annual debt service will not exceed $2.9 million, which
is approximately $750,000 less than the 2010 projections. Favorable construction conditions will
result in Cianbro returning cost savings to the project and the advent of a naming rights partner
with the Cross Insurance Center will generate the additional funding necessary to complete the
original scope of the project as well as fund both a capital replacement reserve and debt service
reserve.
The reconciliation and completion of the project will ensure that the City has a world class facility
that has the financial capacity to ensure it continues to serve the residents for many years to
come.
Department Head
Manager's Comments: This item was reviewed and recommended for approval at a Council
Workshop on September 24, 2012.
City Manager
Associated Information: September 2012 Projection
Budget Approval: L/4,
mance Director
Legal Approval:
ty Solicitor
Introduced for
X Passage
First Reading
Referral
12-330
OCTOBER 10, 2012
Assigned to Councilor Hawes
idl:1
CITY OF BANGOR
�R4iED,
(TITLE.) ORDER, Establishing Final Scope of the Cross Insurance Center
Whereas, In November 2010, the City Council established an overall budget of $65 million for
the Cross Insurance Center based on projected annual debt service requirements of close to
$3.7 million and no naming rights or suite revenues; and
Whereas, to ensure that the total cost to construct the project did not exceed the projected
available revenue sources identified to repay the $3.7 million annual debt service, staff worked
to reduce the overall scope of the project including reduction of furniture and fixtures and
owner's contingency, elimination of the construction of the parking lot on the West side of the
building as well as elimination of the fit out and finishing of meeting rooms and suites; and
Whereas, when the Cross Insurance Center was bid it was with the understanding that any cost
savings and revenue enhancements, specifically naming rights and the sale of suites would be
directed to provide the necessary funding to undertake the aforementioned scope reductions;
and
Whereas, the actual annual debt service of $2.9 million is well below initial projections primarily
due to favorable interest rates and the structuring of the bonds in such a way that the taxable
portions of the building were paid in cash on hand; and
Whereas, the November 2010 debt service projection has been updated to reflect the actual
debt service, plus the addition of the naming rights revenues as well as funding a replacement
and debt service reserve; and
Whereas, the restoration of the furniture and fixtures and owner's contingency, construction of
the parking lot on the West side and the fit out and finishing of meeting rooms and suites will
not increase overall debt service;
Now therefore be it Ordered by the City Council of the City of Bangor.
THAT,
The Bangor City Council hereby orders that a total construction budget of $68.7 million be
established and that the City utilize revenues generated from gaming, sale of naming rights,
and downtown TIF to finish out the construction including restoration of parking improvements,
meeting rooms and suites, furniture, fixture and equipment and restore some owner's
contingency.
The Bangor City Council further orders that the balance of funds will be used to fund debt
service and replacement reserve accounts.
IN CITY COUNCIL
October 10, 2012
Motion made and seconded for Passage
Passed
4:'rell CLE
aoliouno3 o; peu6issd
12-330
OCTOBER 10, 2012
ARENA FUND PROJECTION
September 2012
Racino Revenue Growth Rate 1% per year
Net Revenue Maximum of $88,125,000
Interest Income 1% per year
Total Construction Costs Bond 56,366,352 68,691,000
Cash 12,324,648
Debt Service Term 30 Yrs
56M Exempt/12M Taxable (paid in cash)
Beginning
Casino
Interest
Naming
Reserve Funding
Net Bond
TIF
Op/Cap
Project Debt
Ending
Balance
Revenue
Income
Rights
Debt
Maintenance
Proceds
Revenues
Expenses
Costs Service
Balance
Beginning
8,026,870
8,026,870
FY 11
8,026,870
2,331,583
44,712
598,941
3,113,938 -
6,690,286
FY 12
6,690,286
2,434,915
6,058
20,000,000
264,799
33,470,410 -
(4,603,950)
FY 13
(4,603,950)
2,459,264
75,000
100,000
100,000
36,366,352
-
250,000
32,106,652 846,987
893,027
FY 14
893,027
2,483,857
18,434
170,000
125,000
150,000
750,000
100,000
2,032,769
1,907,549
FY 15
1,907,549
2,508,695
25,221
170,000
150,000
200,000
750,000
75,000
2,993,169
1,943,297
FY 16
1,943,297
2,533,782
25,917
170,000
175,000
250,000
750,000
50,000
2,992,944
1,955,052
FY 17
1,955,052
2,559,120
24,437
170,000
200,000
300,000
750,000
50,000
2,995,319
1,913,290
FY 18
1,913,290
2,584,711
20,662
170,000
225,000
350,000
750,000
50,000
2,994,944
1,818,719
FY 19
1,818,719
2,610,558
17,126
170,000
250,000
400,000
750,000
50,000
2,991,818
1,674,586
FY 20
1,674,586
2,636,664
14,066
170,000
275,000
450,000
750,000
2,995,693
1,524,624
FY 21
1,524,624
2,663,031
11,493
170,000
300,000
500,000
750,000
2,991,443
1,327,704
FY 22
1,327,704
2,689,661
9,171
170,000
325,000
500,000
750,000
2,993,944
1,127,592
FY 23
1,127,592
2,716,558
7,089
170,000
350,000
500,000
750,000
2,992,944
928,295
FY 24
928,295
2,743,723
5,281
170,000
350,000
500,000
750,000
2,991,169
756,130
FY 25
756,130
2,771,160
3,733
170,000
350,000
500,000
750,000
2,994,069
606,954
FY 26
606,954
2,798,872
2,443
170,000
350,000
500,000
750,000
2,994,368
483,901
FY 27
483,901
2,826,861
1,443
170,000
350,000
500,000
750,000
2,992,069
390,135
FY 28
390,135
2,855,129
1,621
170,000
350,000
500,000
750,000
2,996,068
320,818
FY 29
320,818
2,883,681
2,998
350,000
500,000
750,000
2,991,919
115,577
FY 30
115,577
2,912,517
7,178
750,000
2,996,119
789,154
FY 31
789,154
2,941,643
14,166
750,000
2,993,594
1,501,369
FY 32
1,501,369
2,971,059
21,486
750,000
2,994,344
2,249,570
FY 33
2,249,570
3,000,770
25,376
2,992,003
2,283,713
FY 34
2,283,713
3,030,777
25,797
2,995,043
2,345,244
FY 35
2,345,244
3,061,085
26,478
2,994,519
2,438,289
FY 36
2,438,289
3,091,696
27,457
2,991,719
2,565,722
FY 37
2,565,722
3,122,613
28,735
2,991,562
2,725,508
FY 38
2,725,508
3,153,839
30,282
2,995,763
2,913,866
FY 39
2,913,866
3,185,377
32,109
2,994,050
3,137,302
FY 40
3,137,302
3,217,231
34,240
2,994,275
3,394,499
FY 41
3,394,499
3,249,404
36,669
2,994,400
3,686,172
FY 42
3,686,172
3,281,898
39,404
2,993,800
4,013,673
FY 43
4,013,673
3,314,717
42,512
2,993,700
4,377,201
FY 44
4,377,201
3,347,864
61,103
7,786,168
2,550,000
4,575,000
6,700,000
56,366,352
14,250,000
1,488,740
68,691,000 89,696,527
Racino Revenue Growth Rate 1% per year
Net Revenue Maximum of $88,125,000
Interest Income 1% per year
Total Construction Costs Bond 56,366,352 68,691,000
Cash 12,324,648
Debt Service Term 30 Yrs
56M Exempt/12M Taxable (paid in cash)