Over the last several years, city leaders’ push to revive Downtown brought three massive, taxpayer-subsidized projects that radically changed the area’s look and feel.
Those developments also left substantial debt that’s not going away anytime soon.
In total, the city still owes $141,960,000 on Ford Center, DoubleTree by Hilton and Stone Family Center for Health Sciences, according to data provided by City Controller Russ Lloyd Jr.’s office. The Ford Center opened in 2011, while the latter two buildings arrived in 2017 and 2018, respectively.
Evansville has seven bond issuances tied to those projects. All but one mature in 2039 (the other expires in 2031). Budgets passed by the City Council every year from now until then must include payments on those debts.
Councilors will conduct hearings this month on Mayor Lloyd Winnecke’s 2023 budget proposal. Winnecke leaves office at the end of 2023. The Downtown developments will be part of his legacy, as well as that of former Mayor Jonathan Weinzapfel, whose administration planned Ford Center.
The nearly $142 million in red ink sounds like a big number, and it is. But for local municipalities, bonded indebtedness is often necessary to conduct business and demonstrate community progress without raising taxes, said Matt Hanka, a University of Southern Indiana associate professor of political science.
Evansville city residents likely would rebel against tax hikes at a time when so many of their other costs are soaring. But the region’s political culture has historically shown little appetite for higher taxes and debt regardless of the project being discussed, Hanka said.
He noted a skyscraping convention hotel with a rooftop bar was on the table for Evansville at one point, but when the City Council capped financing it was willing to approve, the city instead got the boxy, five-floor DoubleTree.
Hanka described that as a case of “settling” as opposed to making a bolder move.
There also was lengthy local debate in the late 2000s about the size of a new arena before officials agreed on a 10,000-seat capacity project.
“You could argue that we underfund things,” Hanka said of Evansville, and with such an approach, “we get what we get.”
Here’s a breakdown of the debt Evansville city government has tied up in Downtown developments, and how it’s slowly being retired.
Ford Center
There were two bond issuances in 2010 for the Downtown arena – one, a tax-exempt $5 million bond, is off the books. The other, for $122.5 million, was refinanced in 2016.
Lloyd said the refinancing Evansville’s annual payment from $8.2 million to $7 million. The city still owes nearly $86 million on Ford Center.
Ford Center debt payments are made with a few sources. One is food and beverage tax revenue, collected by Vanderburgh County government. That was used for many years to retire debt on the Old National Events Plaza. With ONEP now paid off, the food and beverage stream was diverted to Ford Center debt.
The arena’s debt is also covered by tax increment financing. TIF districts allow local governments to capture all property taxes paid within the district and use them for economic development projects. Evansville has multiple TIF districts, and one of them encompasses much of Downtown.
Lloyd said the city has used casino revenues to pay Ford Center debt if needed, and another available funding source is a professional sports development district. The Indiana legislature recently created that local tax, which is collected by the Evansville Vanderburgh School Corp. and has been primarily used for upgrades at Bosse Field.
Stone Family Center for Health Sciences
Evansville still owes more than $41 million combined on four bonds tied to the Stone Center building, its parking garage and the development of its surrounding land and streetscape.
Lloyd said Downtown Tax Increment Financing is paying that debt.
The Stone Center on Walnut Street brought some medical education and research programs from Indiana University, the University of Southern Indiana and the University of Evansville under one roof.
USI has 235 undergraduate nursing students and 60 occupational therapy students in Stone Center, as well as faculty who teach graduate nursing students online. Enrollment data for IU and UE programs weren’t available.
In December, the Indiana University School of Medicine-Evansville, based at Stone Center, said it had received a $34.2 million gift to create new mental health resources for the region. Nothing else about that effort has been shared since then.
DoubleTree by Hilton
Outstanding debt on two city bonds for the hotel project totals $14.8 million. Lloyd said annual payments are made using Downtown Tax Increment Financing as well as a second TIF district that encompasses only the hotel property.
The five-year-old hotel was built to lure convention business to Downtown Evansville. COVID was a significant obstacle, and in 2020 the hotel also dealt with a mold problem, but city officials say they’re pleased with the property’s performance thus far.
Lloyd said he’s confident Evansville’s TIF accounts will remain solvent enough to pay off debts on all three Downtown developments. Projects such as Post House have boosted those accounts, and so would a future 5th & Main project, he said.
Evansville will look for refinancing opportunities on hotel and Stone Center bonds, as it did for Ford Center a few years ago, Lloyd said.
But the controller added the current economic climate make refinancing difficult.
“Unfortunately rates are moving up, and on some of these bonds you have to wait five years (before refinancing),” Lloyd said.