By Jimmy Nesbitt, Evansville Courier & Press
One of the major revenue sources suggested by a consultant to pay for a new arena has fallen through, but that doesn't mean the project will, too.
The Treasury Department announced Monday that 70 organizations will receive a total of $3.5 billion in New Markets Tax Credits. The Evansville Department of Metropolitan Development, which applied for $60 million in tax credits, was not one of the recipients.
The federal program - which permits local investors, predominantly banks and corporations, to invest equity in exchange for tax credits - was a large piece of a funding plan for a new arena put together by Gateway Consultants. The company projected that tax credits could generate $18 million, nearly a fifth of the estimated cost of a 10,000-seat arena.
Mayor Jonathan Weinzapfel said the tax credits were not an integral part of the funding plan and were viewed as a bonus. The three cornerstones are the Downtown Tax Increment Financing District, riverboat revenues and the existing food and beverage tax that currently is paying off bonds for The Centre.
Gateway's Tom Chema estimated those three sources could generate $32.5 million, $15 million and $18 million respectively. A 10,000-seat arena to replace the aging Roberts Stadium would cost about $92 million, Chema said.
"I think we've looked at things like the New Markets Tax Credits as something that we ought to apply for," Weinzapfel said. "We may not actually need it for this project. ... I think we always had looked at that as kind of a bonus. If it happens, great. If not, we should still be OK with regard to a financing plan."
The city can reapply for tax credits next year, and Weinzapfel said that's a strong possibility.
"It gives us a chance to refine and improve the application," he said. "So I'd like to think we have an opportunity to go back again next year and hopefully have a stronger chance of success."
The mayor remains optimistic, but other people with a say in the project believe the announcement creates a sizable hole in the funding plan. Redevelopment Commission President Bob Goldman said he considered the tax credits to be a "significant component" of the funding plan. The project could be delayed without them, he said. The Redevelopment Commission, a body appointed by the mayor and City Council, will play a significant role in funding a new arena if city leaders decide to build one.
The City Council also will be a key player. Jeff Kniese, R-1st Ward, said funding a new arena without raising property taxes will be a challenge without the tax credits.
"I just think that was one of their cornerstones," he said.
Kniese said the final financing plan must be based on sustainable revenue sources.
"The creative financing that a lot of cities have tried (for arenas) tends to get them in trouble," he said.
Council President Keith Jarboe, D-at large, did not return a phone message for comment. The council's finance chairman, Curt John, D-at large, said he didn't see any revenue sources in the funding plan except corporate sponsorship that could replace the tax credits.
"I have to evaluate (the plan) and see where other funding is available," John said.
Financial consultant London Witte is preparing a funding plan for the city. Weinzapfel emphasized the plan Gateway created was "a broad picture scope of possible revenue sources" and "a guesstimate of what that possibly generates. There's more money available in some of those sources."
"The idea is to make sure that we can put together a financing plan that allows us to finance construction of a new arena based primarily, but not solely, on those three revenue sources and to be able to do it without raising property taxes," he said. "That's still the evaluation that we are going through, and we hope to have an analysis completed in another month or so."
The Department of Metropolitan Development will receive a written response from the federal government within 60 days explaining why it did not receive an allocation. The recipients were chosen from a pool of 239 applicants.
"New Markets Tax Credits are frequently the critical piece of financing needed to complete real estate developments and fund businesses in rural and urban low-income communities," Treasury Deputy Secretary Robert M. Kimmitt said in a news release.