New-Arena Sticker Shock

In Perspectives by Joe Sullivan1 Comment

Showing a lot of gumption, Mayor Madeline Rogero has been quick to support a consulting firm’s recommendation that the city build a glittering new 10,000-seat arena to replace its antiquated Civic Coliseum.

Yet while there is widespread agreement that something needs to be done, the consultant’s $141 million cost estimate for the replacement option that Rogero prefers has left several City Council members with a case of sticker shock. Unless other sources of funding can be identified, the bond issue needed to finance it would nearly double the city’s $170 million in presently outstanding debt. And an estimated $10 million in annual debt service on such a bond issue could take a 23-cent increase in the city’s $2.72 property tax rate to cover it.

Such a prospect also raises the concern whether Rogero could be putting all of her second-term capital-improvement eggs in this one basket to the exclusion of other city needs.

Rogero predictably minimizes these concerns. “Don’t get fixated on a $141 million cost,” she tells me in an interview. “I’ve got one person who is knowledgeable who believes it could be done for $80 million.” While “there’s not going to be a big property tax increase” associated with it, she acknowledges that, “We need to have plans for funding it” and “I don’t have timeline for that. I’d hope to have a plan this year, but I don’t know about an adoption date.”

City Council would have to approve any such plan, and Council members whom I contacted foresee it taking longer. “I don’t think anyone anticipated how expensive it was going to be, and I believe that all we can do in the next two years is lay groundwork,” says Councilman Finbarr Saunders, who’s been a stanch supporter of the mayor. Councilman Marshall Stair is more agnostic. “This is a huge undertaking, and it needs public support. But other than Ice Bear fans I don’t know who’s supporting it, and you can’t justify its cost as a hockey arena alone,” he says.

Rogero says she hasn’t considered looking to UT’s Thompson-Boling Arena to serve as an alternative venue for the large concerts and other non-athletic events the proposed 10,000-seat arena is intended to attract. The city’s consultant, Conventions, Sports and Leisure International, believes that an aesthetically pleasing new arena with more amenities and better acoustics than cavernous Thompson-Boling is more conducive to attracting more bookings. These amenities include the sale of alcoholic beverages, which UT prohibits—a policy that isn’t likely to change anytime soon. But even with a projected doubling of attendance compared to the existing 6,700-seat coliseum, CSL still estimates that the new facility will sustain operating losses of close to $1 million a year, not counting debt service.

Come what may on the coliseum front, Rogero insists it won’t impinge on two other major city initiatives for which the groundwork has already been laid. Yet progress on both of these fronts is also moving slowly.

One is the former State Supreme Court site bounded by Henley and Locust that has sat idle for a decade. Twice before the city has selected developers with ambitious plans for mixed-use projects on the site, but they both have come a cropper. Now, before issuing a Request For Proposal for yet another development proposal, the city is seeking a consultant to conduct “a marketing study for the site to assess its potential for mixed-use development,” which seems obvious. Then, after “a public process to discuss the property,” a city release says, “The goal is to issue an RFP in 2016 so that redevelopment of the site can begin as soon as possible.” But that selection timetable inherently means not before next year at the earliest.

Still longer lead times face commencement of any development of the burned-down McClung Warehouse site on Jackson Avenue that the city acquired in 2013 for $1.45 million. In this case, though, several public infrastructure projects represent prerequisites to private development of the 1.7-acre site. These include:

• A $1.2 million streetscape on decrepit West Jackson between Gay and Broadway with a wider sidewalk, plantings, and new streetlights, on which work is due to start this spring.

• An $11 million replacement of the century-old ramps that lead up from Jackson to the Gay Street Viaduct from both the east and west. This mostly federally funded project is now slated to get underway in the fall of 2017 and take about a year, during which time Jackson will be closed to through traffic.

• TDOT replacement of the Broadway Viaduct, which is due to start in 2016 and take about three years at a cost of $4.2 million. The McClung site will serve as a staging area for this project as well as the Jackson ramp replacement.

“Realistically, we can’t begin redevelopment of the West Jackson Avenue site until these crucial infrastructure projects are finished,” the city’s director of redevelopment, Dawn Michelle Foster, states in a news release. Yet the intervening years would seem to be a fertile time for planning, including an oft-mentioned master plan and selection of a master developer to oversee what’s expected to be a multi-faceted, multi-stage development process.

The one selection the city has made so far is for yet another consultant to conduct yet another market study. In this case the report of the consultant, Annapolis-based Thomas Point Associates, is complete and contains some very interesting findings. Among them: It advises against the selection of a master developer and recommends instead that “an alternative, phased-development approach will be a better route for the city.” Under this approach, phase one would be a mixed-use development on the city’s surface parking lot just west of Gay Street consisting of a 500-space garage on the lower two levels, an upscale grocery store above it, and 200 residential units on two upper floors.

“We see the development of a mixed-use structure on the city parking lot as the opening project that could stand on its own and have a significant impact on the downtown,” the report states. “If it moved ahead on this one component, the City could proceed with the original developer or take a different route on a second and third phase depending on developer performance, market conditions, and other factors.”

So is a master developer still envisioned? The city’s communications manager, Eric Vreeland, responds that, “The city is definitely contemplating using a master developer on Jackson Avenue.” But it’s unclear when.

Whenever I begin to think that the city may be developmentally challenged, I remind myself of the masterful job that deputy to the mayor Bill Lyons did of guiding the Market Square redevelopment process some 15 years ago in his then capacity as chairman of KCDC. Then, too, there had been study after study and proposal after proposal going every which way. But Lyons stayed the course, and I’m glad he’s still around.

Joe Sullivan
Columnist

Joe Sullivan is the former owner and publisher of Metro Pulse (1992-2003) as well as a longtime columnist covering local politics, education, development, business, and tennis. His new column, Perspectives, covers much of the same terrain.

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