Good Read concerning OPAC/O-rena

[zerobullchip]

How will tab for downtown be split?

Officials crunch the numbers for arts and sports venues that may cost $1.7 billion.
David Damron and Mark Schlueb
Sentinel Staff Writers

November 6, 2006

The proposed financing arrangement to pay for a new arena, a performing-arts center and Citrus Bowl renovations is so complex and expensive that Orange County's top auditor is calling it "a nail-biter."

Budget-crunchers from Orlando and the county are negotiating an agreement that lays out how they'll share costs of the unprecedented deal. The $1 billion lineup of projects announced in late September requires a massive amount of borrowing, with the loans being paid back with a tax on hotel rooms and downtown property. The projects could actually end up costing $1.7 billion or more as loans and interest are paid off over several decades.

A preliminary version of the agreement obtained by the Orlando Sentinel calls for spending audits, pre-approved building plans and construction-cost caps, and it even secures luxury seats for politicians at each venue.

"It may be a great political idea to say 'Let's do the three projects altogether,' " Orange County Comptroller Martha Haynie said. "But administratively, I don't want to say it's nightmarish . . . but it is an unusually complex deal.

"This one's going to be a nail-biter," Haynie said.

The county's earliest draft of the agreement -- which will still take weeks to complete -- puts previously agreed-to provisions of the deal into a legally binding document the city, county and all other parties must sign off on.

For instance, it requires the Orlando Magic to "unconditionally and irrevocably guarantee payment" of $100 million in case tourist taxes fall short, a provision to which the team already has publicly agreed.

Other key provisions:

Contractors hired to work on the three facilities must set a "guaranteed maximum price" for each one, capping costs. Magic executives had already agreed to cover cost overruns for the $380 million arena.

The county comptroller would have the authority to audit the books, not only during construction but until the loans are paid off. All building plans for the city-owned facilities also must be approved by the county.

The county would not chip in its share of the performing-arts center until arts boosters raise the $75 million in private contributions to which they have committed, including $25 million that would be set aside for an endowment that would help pay future operations.

County officials want the agreement to guarantee that county leaders will receive the same number of suites or premium seating in each of the venues that city leaders receive.

Of the $1.04 billion needed to build the venues, about $772 million would be obtained by issuing bonds that would have to be repaid over time, boosting the cost at today's interest rates to about $1.7 billion. Under the terms of the draft agreement, tourist taxes would be used to pay down the debt beginning in October 2008.

County plan's restrictions



The county's proposal prohibits spending the tourist tax on city staff salaries, operational expenses, outside consultants or land and infrastructure costs. All of those would be borne by the city or private parties.

County officials control the tourist tax, and the proposed agreement gives the portion of the tax that doesn't already go toward the Orange County Convention Center and tourism marketing to the venues. But the county would not carry any risk if the volatile tax were to fall short. That risk, along with the responsibility for most land, salary and infrastructure costs, would fall on the city.

That's the main concern Haynie has with the potential deal, so far.

"The city is going to be under serious stress on this," Haynie said. "But they have some smart financial minds working on it. We're just going to have to be alert continuously on this."

Tax concerns

Orlando commissioners, who are generally supportive of the three projects, have stressed that they want to make sure the deal won't put residents' property taxes at risk.

"We need to make sure this is safe so taxpayers aren't left holding the bag. We need to be very careful on this -- we're talking about spending over a billion dollars," said Commissioner Phil Diamond, who has taken the most cautious position on the projects and recently voted against buying land for a new arena.

Officials in Orlando Mayor Buddy Dyer's administration have sought to reassure commissioners that the deal isn't too risky.

The city has increased the size of its reserve account -- comparable to a homeowner's emergency rainy-day fund -- to about $75 million, and it is trying to line up a bank line of credit to serve as backstops in case tourist taxes fall short in coming years. The larger reserve and credit line will also allow the city to get more favorable financing for the projects.

Even so, Dyer said there is "just the remotest possibility" that it would be necessary to dip into the city's reserves to cover debt payments on the three venues.

Commissioners also are concerned about the cost of running the facilities after they're built.

Orlando officials say they're trying to make sure the facilities won't be a burden on the city. The goal is to be "bottom-line neutral," said Rebecca Sutton, the city's chief financial officer.

That goal could be a tough one. The arts center is expected to need as much as $1.5 million a year to fund its operations, though the city hopes to reduce that cost by squeezing more out of private commercial development that will share the site. And while the city is used to operating a basketball arena, the new one is to have more than twice the square footage.

"The facility will be twice as big and have twice the operating costs," Sutton said.

David Damron can be reached at ddamron@orlandosentinel.com or 407-420-5311. Mark Schlueb can be reached at mschlueb@orlandosentinel.com or 407-420-5417.

[Jasonhouse]

ok... so hopefully folks have aired their opinions on issues not relating to the thread's topic, and we can move on constructively...



I'm rather surprised that cities are so willing to spend such mindboggling sums catering to what amounts to special interests... But at the same, they are unwilling to spend similar sums on things (like transit, education, healthcare, etc) that unquestionably benefit the majority of residents, if not everyone (either directly, or through the improved QOL)...

I hope Orlando figures out the financing, but I also hope that Orlando residents see this expenditure for what it is... The use of a VAST sum of public money to generally benefit a select few people.

[Dale]

Actually, Orange County has spent mindboggling sums catering to public education. And were willing to spend such sums on mass-transit, but that measure was rejected by voters, and then of course a more palatable deal followed involving commuter rail.

[SkyDiveJunkee]

Originally Posted by Jasonhouse

ok... so hopefully folks have aired their opinions on issues not relating to the thread's topic, and we can move on constructively...



I'm rather surprised that cities are so willing to spend such mindboggling sums catering to what amounts to special interests... But at the same, they are unwilling to spend similar sums on things (like transit, education, healthcare, etc) that unquestionably benefit the majority of residents, if not everyone (either directly, or through the improved QOL)...

I hope Orlando figures out the financing, but I also hope that Orlando residents see this expenditure for what it is... The use of a VAST sum of public money to generally benefit a select few people.

Well, for that matter even mass transit benefits a select few, as does a city park, a charter school or sidewalk improvements. It benefits those who take advantage of it. Hopefully Orlando can learn a lesson from its larger neighbor to the South concerning cost overruns and such with regards to a new PAC and arena. Orlando deserves these projects as much, or more so than any city I can think of.

[Jasonhouse]

^Something tells me that a whole hell of a lot bigger portion of the population can afford a ticket to ride the train or go to the park (for free), compared to the hundreds of dollars it can cost for a family to go to the for-profit events typically held at the venues being built... Are the tickets to these events now going to be drastically discounted for taxpayers, since it is they who are in fact paying for the facilities? Something tells me that no, the prices will probably go up if anything.

It's not about "deserving" anything... I don't even know what that is supposed to mean exactly... How does one "deserve" the right to spend billions subsidizing for-profit entities?... It's about fiscal responsibility.

[SkyDiveJunkee]

It is a wise investment (as would be mass transit, of course) in the future of a growing city, one still struggling with its identity.

And yes, it is about "deserving."

[Jasonhouse]

^ I say, if it is so great, then people like you should pay for it as investors in the corporations who will benefit from the use of these facilities instead.


ps... Can you pretty please explain what in the heck "deserving" means in the context you use it in?

[zerobullchip]

Another article explaining funding of the project.

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http://www.orlandosentinel.com/news/...home-headlines

SENTINEL SPECIAL REPORT DOWNTOWN MAKEOVER

Performing-arts center planners get down to details
Elizabeth Maupin
Sentinel Staff Writer

November 11, 2006

When Mayors Buddy Dyer and Rich Crotty announced a pact this fall to build a downtown performing-arts center, longtime advocates of the project were relieved.

The arts center, everybody said, is a done deal.

But those working on the project are just getting started. Hunting down tens of millions of dollars to help build and sustain the center is just one of the tasks looming.

Lots of decisions have yet to be made on the project, which city staffers estimate will cost $389 million. Neither Orlando nor Orange County commissioners have approved the agreement between the two that would allow the center to be built. And the nonprofit group Orlando Performing Arts Center, or OPAC, is figuring out what its arrangement with the city will be.

Even many apparent certainties about the performing-arts-center project are a shade short of certain. Here are some issues that OPAC backers are working out:

Location. The center is expected to be built on 9 acres bordered by Orange and Rosalind avenues and South and Anderson streets, just east of Orlando's City Hall. Although Dyer asked OPAC to consider building at the Centroplex, west of Interstate 4, the board rejected that idea for the long-favored site at the southern end of Magnolia Avenue.

Kathy Ramsberger, OPAC's executive director, calls it "the 100 percent site" -- it's in the heart of downtown, convenient for downtown workers and residents, close to parking garages and can be expected to spur other development.

Several buildings exist on that land, including the city's Fire Station 1, long slated to be relocated, and the round office building, where OPAC's offices are, across from City Hall. Both buildings would be torn down.

A thornier obstacle is the First United Methodist Church's Ministries and Education Building, where a multimillion-dollar renovation is under way. Ramsberger and OPAC board members have been in delicate discussions with church personnel to try to satisfy both groups.

One alternative would be for OPAC to include the church's needed 55,000 square feet in a new building on the arts-center campus.

"Our goal since day one was that they would be willing to be part of our campus," Ramsberger said.

Church spokeswoman Laura Guitar, of the public-relations firm Fry Hammond Barr, said the church can't consider any alternatives until it knows for sure that OPAC wants the land -- and whether it would be negotiating with OPAC or the city.

Site plan. One question, which Ramsberger, OPAC President Jim Pugh and many others are busy trying to refine, is what exactly their project will be. Current plans call for a 2,800-seat theater for amplified plays and concerts, a 1,800-seat acoustical theater, a 300-seat theater and a public plaza facing City Hall.

Included on the site plan also are proposals for a 200-room hotel, an office tower for the development company CNL and two more office or condo towers.

Income from that commercial development is expected to help OPAC sustain itself.

Architects. Two architectural firms -- Barton Myers Associates of Los Angeles and Ehrenkrantz Eckstut & Kuhn Architects (EE&K) of New York -- have been involved in the project's early stages, developing the arts center's preliminary plans far enough so OPAC and its partners could draw up an estimated budget.

The goal, Ramsberger said, is to hire both firms to do the project's actual designs -- Myers for the buildings and EE&K for the master plan. A third firm, probably from Orlando, would be named the project architect to oversee construction. Still, city and county requirements for transparency in the hiring process could change some of those plans. Another major question remaining is what the center will look like. Assuming Myers gets the building-design job, neither he nor anyone else has revealed any designs.

Tenants. One known quantity is the identity of the arts center's major tenants. Three are among the city's homegrown professional arts groups: the Orlando Philharmonic Orchestra, the Orlando Opera and the Orlando Ballet. Two others, Florida Theatrical Association and the Festival of Orchestras, present touring plays and orchestras from around the world.

The complex's smallest theater could serve some of Central Florida's smaller performing-arts groups. Some of those groups are interested. Kelli Cummins, executive director of Voci Dance, said she hopes Voci will be able to afford to rehearse at the center, to perform there or both.

"I hope it embraces everyone in the community," she said.

At Mad Cow Theatre, general manager Mitzi Maxwell said her group, too, might be interested in using a small theater if its design is right. A 300-seat theater might help Mad Cow grow its audience, which is now served by two tiny theaters, one seating 100 people and one seating 40 to 60.

Programming. Deciding what kinds of entertainment will fill the three halls and the outdoor plaza is fairly far down the road, Ramsberger said.

To get an idea of the programming, she said, audience members might check out the widely varied options at the New Jersey Performing Arts Center in Newark, where upcoming performances include the Kirov Orchestra, tap-dancer Savion Glover, and Christian singer Michael W. Smith. Another arts center whose programming Ramsberger mentions is the Cerritos Center in suburban Los Angeles, where acts are booked to appeal to many cultures.

Fate of the Bob Carr. Another question that won't be decided for a while is what will happen to the 80-year-old Carr Performing Arts Centre. Many arts lovers have complained about Carr for years, and OPAC chief Pugh jokes that he would like to see the place blown up. But a city task force is trying to determine how the 60-acre Centroplex site and its buildings could be used. Ramsberger said she hopes the city will keep the Carr and use it for programming that complements OPAC's.

Source of funds. Before any of that is decided, though, the arts center's 22-member board will remake itself to concentrate on fundraising. Of the $389 million price tag, more than $250 million is expected to come from public funding -- tourist-tax refunds, state sales taxes and a property-tax district downtown.

Pugh is fairly confident that fundraisers can come up with $100 million from private donors. The difference, he said, could come from the state, the city or the county -- or it also would have to be raised privately.

The only remaining option, he said, would be to scale back the plans, which would mean cutting back on the sizes of the arts center's theaters. That's a decision OPAC can put off -- for the time being. Project backers expect to determine the theaters' actual sizes within six months.

Elizabeth Maupin can be reached at emaupin@orlandosentinel.com or 407-420-5426

[Dale]

The writer seems determined to convey a cautionary tone. Still, $20.5 million pledged, right out of the gate, towards the $50 million or so needed to trigger construction, is not bad at all.

[jzquince69]

I don't see what the big drama is over these projects. Orlando's lack of a new PAC was a criticism. Lack of an updated Arena, another criticism. Lack of an improved football stadium, yet another criticism. Now, they come up with a plan to improve on all 3 of these things and what do they get? Criticism.

Everyone makes it seem like CFLA is a stranger to spending big $$$ on these types of projects. Lets not forget the OCCC Phase V expansion at over $800M; the OC Cthse at around $500M; OIA expansions at $1-2B over the last decade. Not to mention OOCEA's multi-billion dollar expansions over the last decade as well.

Light Rail was shot down in '97. A new arena was shot down in like '98-2000. They never could figure out the deal with getting a new PAC. Now, they got a plan for all three (and Citrus Bowl)-- for the first time, and they have a plan in place and details to be worked out to make it work.

THey devote resources to lure Burnham, they also get criticized.

I'd rather see this type of second-guessing and criticism than the type you'd see if the region wasn't doing anything to better itself and the state.

[smiley]

While it may work out fine - borrowing on that scale for simultaneous non-necessary (not unnecessary but not really absolutely emergency either) projects should always be scrutinized closely. Debt is debt and public debt is paid in two ways - cutting more essential services and raising taxes (otherwise known as coercion) - so you should look at it closely. You may want to stil do it but no harm in making sure it really is the best method

[Jasonhouse]

Originally Posted by jzquince69

I don't see what the big drama is over these projects. Orlando's lack of a new PAC was a criticism. Lack of an updated Arena, another criticism. Lack of an improved football stadium, yet another criticism. Now, they come up with a plan to improve on all 3 of these things and what do they get? Criticism.

????

Of course there is criticism... They're talking about spending about over $1.5 BILLION in taxpayer dollars for projects which are largely in the best interests of a handful of corporations, not necessarily the public at large... Did you think that everyone would just cheer and wave flags?

[jzquince69]

Originally Posted by Jasonhouse

????

Of course there is criticism... They're talking about spending about over $1.5 BILLION in taxpayer dollars for projects which are largely in the best interests of a handful of corporations, not necessarily the public at large... Did you think that everyone would just cheer and wave flags?

no, especially not in this town.

But what are the corporations/organizations represented here: The Magic. Florida Citrus Sports. FAMU & BCC; The Predators; The Orlando Ballet; THe Orlando Opera; Broadway show scheduling company; random concert scheduling company; etc.

Sounds to me like the regular run of the mill-type of tenants you might find anywhere in the country, save a home football team for the stadium. So, if most cities around the US are spending this kind of $$$ in these kinds of situations, then, its a problem with the system in place.

I don't know. public project analysis isn't my fortay, b/c I don't know what the viable alternative to funding ideally would be in this case, and what would be considered reasonable or fair to all parties involved.

[cwat212]

I can't get over the amount of $$$ that is to be spent. I know money and construction costs have gone up but Tampa's PAC, Arena and NFL Stadium were all built for less than 1/3 that amount and all are less than 10 yrs old.

Great for Orlando but crazy amounts of debt for the tax base.

[Jasonhouse]

Originally Posted by jzquince69

I don't know. public project analysis isn't my fortay, b/c I don't know what the viable alternative to funding ideally would be in this case, and what would be considered reasonable or fair to all parties involved.

It's a lot of money man... People will by their nature be skeptical... And rightly so.


ps... "fortay" is "forte"...

[jzquince69]

Originally Posted by Jasonhouse

It's a lot of money man... People will by their nature be skeptical... And rightly so.


ps... "fortay" is "forte"...

thanks for noticing. I had the Miami Hurricanes on the brain ala Brian Fortay as I was writing it. The "U".

it is crazy money though.

[drjnieto]

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