Is Cumberland County Civic Center bond a ‘good deal’ or ‘voodoo accounting’?

An artist's rendering of proposed upgrades to Cumberland County Civic Center.
Courtesy of Canney Communications
An artist's rendering of proposed upgrades to Cumberland County Civic Center.
By Seth Koenig, BDN Staff
Posted Nov. 03, 2011, at 6:10 p.m.

PORTLAND, Maine — Friends and foes of a proposed $33 million bond to upgrade the Cumberland County Civic Center clash on nearly every point.

Proponents of the bond, which voters in the county’s 28 municipalities will consider at the polls on Nov. 8, say the renovation project will largely pay for itself through increased revenues. Opponents say the project only breaks even using “voodoo accounting” and will burden taxpayers.

Some of those against the project have suggested the civic center be sold to a private developer or at least moved to a spot outside of downtown Portland, perhaps right off Interstate 295. Those in favor of the bond argue the civic center is in the best spot possible and simply needs a strategic overhaul to maximize its economic potential.

Bond backers say the benefits of a rejuvenated 6,700-seat arena, home to the Portland Pirates and dozens of performance events each year, will be felt in the farthest corners of the county. Detractors say rural outlying towns will get little from a job that primarily benefits Portland.

Foes of the plan argue the project needs more analysis and public buy-in before a bond item is put forward, while friends of the renovation counter that exhaustive studies have been done, and doing the work now will capitalize on low contractor costs in the struggling economy.

One thing both parties seem to agree on is that the building has been losing money in recent years.

“The losses of late can be stopped with this investment,” Brian Petrovek, chief executive officer of the Pirates, said. “Bond rates are at an all-time low and construction costs are incredibly competitive. We’re going to get more for our money than we’ve ever hoped for. Plus, we’ll be able to repair this fracture in the business model that has created financial trouble.”

Neal Pratt, chairman of the civic center’s board of trustees, said the arena’s shortfalls are a recent trend coinciding with the economy, while the upgrades prime the venue to rebound.

“We’ve been successful,” Pratt said. “The building financially has been very successful. It has produced a ton of jobs, directly and indirectly, and about $15 million in annual economic impact to the region. It’s been in the black about two-thirds of its 34 years in existence.”

Lisa Villa — chairwoman of the county’s finance committee and a selectwoman in Harrison, where the board voted not to recommend the bond — disagreed. She said she doesn’t believe the repairs will return the venue to profitability and argued that civic center trustees regularly overlook outstanding debt when promoting the arena’s history of financial stability. She accused bond supporters of buying into “voodoo accounting.”

Villa said the center already carries more than $200,000 a year in debt service and that in the 2012 budget, the county is being asked to raise another $300,000 in tax revenue to cover the center’s operating deficit from the previous year.

“We’ve all had to cut back our budgets,” said Villa, who is running to become a county commissioner when the panel expands from three to five members this fall. “We’re all trying to reduce any tax increase because we understand people are struggling, but the civic center has done nothing to curb its expenses and now they want to increase them.

“The group that runs the civic center, they’re not accountable to taxpayers. I think it’s important for me or for the finance committee to say, ‘These numbers don’t work and they never will,’” she said.

Similar arguments were made about a new arena in Bangor, even though that facility is slated to be paid for largely with revenues from Hollywood Slots, the city’s racino. After the City Council approved a scaled-back project, residents collected enough signatures to force a referendum vote.

Supporters of the Bangor arena said it would draw additional acts and conventions to the city, bringing with them new revenue for the region. Opponents warned that if business at Hollywood Slots declined, the city would get less money and taxpayers would be on the hook to pay for the arena.

In May, Bangor residents voted 3-to-1 to go ahead with the $65 million project, which is now under construction.

In Portland, Pratt said the annual bond payments will be $2.1 million. The plan is for the county to pay $1 million of that each year at a time when nearly $2.2 million in annual bond payments from the county jail construction are coming off the books. The remainder of the civic center bond payments will be covered, he said, by more than $1 million in additional revenues the venue will see because of the renovations.

An analysis done for the task force by consultants Brailsford & Dunlavey indicated that revenue increases would come from increased concession sales ($400,000), ticket sales for new premium seating sections ($760,000), naming rights on the venue ($200,000) and new luxury boxes ($250,000).

Not counted in the projected revenue increase is whatever might come from an increase in events at the site as it becomes more friendly for touring acts, which bond supporters suggest is a likely result. In addition to dramatically expanding the concourse areas to provide easier access to concessions and bathrooms, the overhaul work includes making the loading docks and staging areas more accommodating to ever more elaborate stage sets.

The problem with the current facility, says James Cohen, who was mayor in 2006 when discussions began about the future of the civic center, isn’t that it has too few seats. It’s that acts couldn’t get into Portland and turn around fast enough to make it worth the trip.

The alternative — what Cohen called the “do nothing” scenario — was projected by the consultants to have a reversed affect on the civic center’s financial stability.

“If we don’t invest in it, the national events are going to slow down and will eventually stop, because people will stop coming to an antiquated facility,” Pratt said. “At the same time, the maintenance needs will grow over time. So the revenues will go down and the costs will go up.”

But beyond the dollars and cents, he said, voters must also consider the cultural value of the civic center.

“Anybody who looks at this is as purely a cost is only looking at half the story,” Pratt said. “Like any cost, you have to look at what you’re investing in. In the case of the civic center, we can quantify the benefit throughout the region.”

He said events at the civic center have been shown to draw attendees from throughout the county, as well as New England and Canada.

But Charles Leavitt, a Raymond selectman, said he doesn’t believe the benefits truly reach far beyond downtown Portland.

If you’re within the city limits of Bangor and Garth Brooks comes in, you’ll see a big economic impact within the city,” Leavitt said. “That’s not the case over Cumberland County. For five years in Raymond, I’ve always pushed to settle on what are the core services a county government should provide. … Should government be in the entertainment business? That’s what this is, the entertainment business. Should government be in hot dogs and hockey?”

http://bangordailynews.com/2011/11/03/news/portland/is-cumberland-county-civic-center-bond-a-%e2%80%98good-deal%e2%80%99-or-%e2%80%98voodoo-accounting%e2%80%99/ printed on October 23, 2014