BANGOR, Maine — While the stagnant economy is no boon to most, it is paying some unexpected dividends to the city of Bangor.
Wednesday’s Bangor City Council finance committee meeting had councilors beaming over a much lower-than-expected total debt service cost for Bangor’s new civic arena and events center.
“We estimated our annual debt service initially at $3.7 million per year for 30 years, but thanks to historically low interest rates, Bangor’s good credit rating, and more interest than expected on our debt service for the arena, it’s going to be $2.99 million,” said Bangor Finance Director Debbie Cyr.
That computes to an annual savings — or lower-than-estimated debt service cost — of almost $750,000 a year.
The five councilors — Pat Blanchette, Nelson Durgin, Joe Baldacci, Geoffrey Gratwick and James Gallant — who are members of the finance committee could hardly wait to sign off on the deal.
“It’s a better-than-expected deal for Bangor with no tax cost to our citizens,” said Baldacci. “This means that with revenues from the casino and TIF funding, we’ll be able to manage the arena’s cost quite nicely, saving $23 [million] to $24 million overall over a 30-year period.”
Cyr said the overall initial debt service estimate, which was done back in November, was determined based on our revenue received from downtown TIF [tax increment financing] funds and gaming revenue from Hollywood Casino.
“That’s how we arrived at our $65 million estimate for the arena,” she said.
“I think it was [former Councilor] David Nealley who used to call Debbie obnoxiously conservative when she worked up her estimates,” said Bangor City Manager Cathy Conlow. “Debbie does always err on the conservative side because she’d rather have people be pleasantly surprised when the final numbers come out, and we are very pleasantly surprised with these numbers.”
Cyr said besides historically low construction costs and interest rates, the arena project benefited from greater-than-anticipated interest and competition among investors for Bangor’s debt service.
“We were very pleased with the results of the [debt service] sale yesterday,” Cyr said. “It shows we have good credit standing within the investment community. We did all our due diligence, and our credit ratings from Moody’s and Standard and Poor’s make us an attractive buy.”
Apparently Bangor’s debt is even more attractive than Cyr dared to hope.
“We actually have 10 bidders for our debt service, but we didn’t expect that many, only because of the scope and cost of this project, which we don’t do very often,” she said.
Baldacci said he hopes citizens realize this is further proof of the increasing value of the newly named Cross Insurance Center.
“Several councils believed in this project, and this is a reward for that faith,” Baldacci said. “This shows how the hard work of our city employees and due diligence people like Debbie Cyr has paid off for the citizens of Bangor.”