BANGOR, Maine — Using conservative 30-year projections of the city’s main funding source for a new arena complex, Bangor could support a $54 million project if no other funding sources were added.
That was the starting point of a presentation Tuesday by city Finance Director Debbie Cyr to city councilors, who are inching closer to green-lighting one of the biggest projects in Bangor’s history.
On the city’s table is a new arena and convention center that would cost at least $71 million and perhaps even closer to $80 million if certain add-ons were included.
Based on existing revenue earned from Hollywood Slots and annual projections over the next 30 years, the city could borrow $54 million, creating a “gap” of at least $17 million.
However, another potential revenue source emerged on Tuesday that could help bridge that gap.
The city has a downtown development tax increment financing district whereby downtown businesses pay into a fund that then is used for improvements specific to that district. The downtown development TIF generates about $2 million annually, most of which comes from the biggest business in the TIF: Hollywood Slots. Cyr said if the city prefers, it could apply any amount of those TIF funds to cover the debt service associated with a new arena. If the city took $1 million each year, it could support a project of about $64 million, narrowing the gap to $7 million.
However, Cyr cautioned that if the city wants to use TIF funds to cover debt service, state law allows a maximum of 20 years. Since the arena project would assume a 30-year bond, she suggested that the city approach the Legislature to make an amendment. Councilors agreed Tuesday to move quickly and said the amendment could be a way for the state to support the project without having to offer up any money.
As for other revenue, Michael Aube of Eastern Maine Development Corp. and a local friends of the arena group led by Miles Theeman and Mark Woodward have pledged private sector support but have not offered specific amounts.
Councilors have acknowledged that they need to make a move before the business community at large offers any investment. Tuesday’s finance-heavy meeting seemed to leave most councilors optimistic that the project is doable.
The city is considering a proposal to build a 5,800 fixed-seat arena — expandable to 8,050 seats — and a new convention center that would double the current amount of space for meetings and events. The project also could include a meeting building and sky bridges over Main Street and Dutton Street, although those pieces are looking more and more unlikely. Don Dethlefs, the project’s architect, and representatives from Cianbro Corp., the project’s construction manager, have been working on the design and cost projections.
Councilors lauded Cyr for presenting conservative estimates on Hollywood Slots revenue and also on borrowing interest rates. In essence, what she presented was several steps down from a best-case scenario. She didn’t factor in any possible contributions from Penobscot County or consider that Hollywood Slots could increase or decrease business over the years.
Councilor Cary Weston, who has done a 180-degree turn on the arena proposal, said he is confident the city can build a complex without relying on taxpayers. He offered a simple suggestion of requiring new arena and convention center patrons to pay for parking as a way to generate easy revenue.
Others shared Weston’s confidence.
“We need to do this,” Councilor Rick Bronson said. “It will take some creative financing and even some leap-of-faith financing.”
Despite the optimism of the council and the Greater Bangor business community, there remains unease in the community about the project’s cost and its reliance on unknown factors.
Resident Bob Cimbollek and others have advocated for a citywide referendum, but councilors have not committed to that idea.
An aggressive timeline has been suggested by Cianbro to ensure the project’s costs don’t rise. The local company already has knocked off nearly $6 million from the expected cost as a gesture to the city, but has said Bangor needs to act by January to ensure a May 2011 groundbreaking.
A public comment session will be hosted by councilors at 6 p.m. Thursday and another session is likely to be scheduled for next week.
Correction: This article has been updated to correct the time of the public comment session on Thursday.