HomeMy WebLinkAboutA006 - Letter to Council dated November 23, 2013 requesting Special Bond Election 4
MEMO
Ames ,
Caring People•Qztality Pt-grams Exceptional Set-vice
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To: Mayor and Ames City Council
From: Steven L. Schainker, City Manager
Date: November 23, 2013
Subject: Request For Special Bond Election For New Convention
Space
On November 12, 2013, the City Council heard a request from the Ames
Convention & Visitors Bureau to support a bond issue referendum that, if
approved, would authorize the City to issue up to $19,000,000 in general
obligation bonds to partially fund the construction of a new multi-purpose
conventions facility, as well as the renovation of the Scheman Building.
In a previous report to Council, the staff attempted to address many of the
issues that would be of interest to the Ames voters, such as:
What is the estimated tax increase associated with this project?
Based on current year (FY 13/14) valuation, the increase in the
property tax rate for this additional project is estimated to be $0.575
per $1,000 of taxable value, or a 5.3% increase in the tax rate. The
additional cost for the residential property class is estimated at $30.35
per $100,000 of taxable valuation and $57.46 for commercial and
industrial.
Who will own the new facility?
The new multi-purpose facility will be jointly owned by Iowa State
University and the City of Ames. The renovated Scheman building will
continue to be owned by the University.
Who will manage the new facility?
Since the new facility will be situated on University property at the Iowa
State Center, the University will assume the ultimate responsibility to
manage the facility. However, since the University already contracts with
a private entity to manage the Fisher Theatre, Stephens Auditorium, and
the Scheman building, it is expected that the new facility will be managed
City Manager's Office 515.239.5101 main 515 Clark Ave.
515.239.5142 fax Ames,IA 50010
by the same private contractor that the University uses to manage their
other buildings at the ISU Center.
Who Will Make Policy Decisions For The New Facility?
It is being recommended that a three person policy committee be formed
to deal with the major policy direction for the space. This committee
would include the Executive Director of the Convention and Visitors
Bureau, the University's Senior Vice President for Business and Finance,
and the City Manager.
Who Will Be Responsible For the Expected Annual Deficit?
It is important to note that this type of facility will not generate enough
money to cover its operating costs. It has been estimated that this annual
deficit could be approximately $230,000 annually. If the Council decides
to support this project, it is important that the City not assume
responsibility for financial obligation.
To address this issue, the managing entity, Iowa State University, will be
responsible for all finances related to the operations of the new facility,
including any deficits. However, it is anticipated that the Ames
Convention and Visitors Bureau will enter into a separate agreement with
the University to pledge their funds to offset any operating deficits at the
new facility. The ACVB has projected that the new space will help
generate sufficient additional hotel/motel tax revenue from visitors to
cover these annual operating deficits.
Will The Ames Community Have Access To The New Space?
If the project is successful, access to six rooms (with capacities ranging
from 5 to 120) on the ground floor of the Scheman Building will be made
available, without charge and based on availability, for functions
sponsored by non-profit organizations and the City.
Given The Date For The Special Election, How Will The City Budget
For This Project?
The City's budget for Fiscal Year 2014/15 will be completed by the time
the results of any bond issue are known. Therefore, it would be
premature to include the first principal and interest payment for bond debt
as the staff prepares the budget. The earliest that this debt could be
safely included in the budget will be for Fiscal Year 2015/16. Assuming
that the project will move ahead sooner than that, the University's
$19,000,000 share will need to be drawn down first.
When will the University commit to its $19,000,000 share?
The total project is estimated to cost $38,000,000; and the financing plan
calls for the University to provide $19,000,000. Warren Madden has
indicated to the ACVB that University President Steven Leath has
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committed to financing the University's proposed share of the project.
However, this commitment must ultimately be approved by the Iowa
Board of Regents.
The University intends to bring this matter to the Regents' February 2014
meeting so that the voters will know whether or not the University's share
of the project financing is committed.
If the City Council decides to move ahead by placing this matter before
the voters, our bond attorney has developed the following language for
the referendum.
"Shall the City of Ames, in Story County, Iowa, issue its bonds
in an amount not exceeding $19,000,000 for the purpose of
paying one-half of the cost of constructing a multi-use
convention facility located at the Iowa State University Center,
to be jointly owned by the City and Iowa State University, and
of renovating the Iowa State University Scheman Building?"
In addition, the City Council should give direction as to how the cost of
this proposed special bond election should be paid — by the Ames
Convention & Visitors Bureau, or from the available balance in the
Hotel/Motel fund balance.
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