Haymarket plan’s price tag touted

LINCOLN — City officials here are preparing to ask voters to approve a $25 million general obligation bond issue to help finance a new 16,000-seat arena in the Haymarket district.

But the bond issue request would be only part of the cost to the public. Lincoln Mayor Chris Beutler also plans to seek $10 million per year in new taxes on hotel rooms, car rentals, restaurant checks and bar tabs to help cover the city’s share of the project.

The ambitious redevelopment plan for the Haymarket also would rely upon significant private investment and tax-increment financing, in which new property taxes generated by the improvements are used to repay project debt.

Beutler describes the proposed bond issue — which represents less than 15 percent of the arena’s cost — as a “good deal” for taxpayers.

In comparison, Omaha voters approved a $198 million bond issue in 2000 to build the $281 million convention center and arena on the riverfront.

A national expert, however, cautioned that Lincoln officials may be underestimating the amount of public debt required for the $168 million project.

The May 11 bond vote would be required by state law because city officials plan to repay the $25 million debt with a share of state sales taxes generated by the facility.

If voters approve, the first phases of the work would begin in early summer 2010. The anticipated completion date for the arena is October 2013.

Beutler has pledged not to raise property taxes to pay for the arena project.

The bond vote also is how Beutler plans to fulfill his promise to win voter approval before moving forward with the ambitious project.

If voters say “no,” the project is dead, he said last week.

Backers envision the arena project transforming downtown Lincoln in much the same way the Qwest Center Omaha and riverfront development transformed Omaha.

The $168 million arena, which would be the home court for Husker basketball, would be the centerpiece of a nearly half-billion dollar expansion of the Haymarket district. The quaint area of shops, restaurants and bars and an open-air farmers market is located downtown in the oldest corner of the city.

The West Haymarket proposal, as it’s called, would move BNSF railroad tracks and an Amtrak train station about two blocks west to enlarge the existing district by more than 50 acres.

“It is a very good deal for the taxpayers — and it is an absolute imperative for the citizens of Lincoln,” Beutler said. The project is needed to attract tourists and retain young people, he said.

However, Heywood Sanders, a professor of public administration at the University of Texas at San Antonio, cautioned that other cities have struggled when their projects failed to achieve the anticipated amount of private investment.

“The reality is those things often don’t work nearly the way their proponents say they will,” he said.

Private investment fell short at St. Louis Ballpark Village, planned when the city built a new baseball stadium, Sanders said. The Power and Light District in Kansas City did not generate enough new tax revenue to pay off its tax-increment financing.

Lincoln has been negotiating with International Stadia Group (ISG), a London-based company that specializes in private financing of sports facilities, on a deal that would cover nearly half of the arena’s $168 million price tag.

Project coordinator Dan Marvin said the company is tentatively expected to pay about $75 million in a deal that would give it the right to sell box seating, advertising and naming rights for the new building for a set number of years.

The remainder of the cost would be covered by arena revenues, new taxes on bar and restaurant fare, hotels and car rentals.

Lincoln currently has no tax specifically on restaurants and bars. The new 2 percent tax would apply on top of the 7 percent state and city sales tax. It would generate about $7 million per year, according to Marvin.

The restaurant and bar tax has been proposed in Omaha for various purposes, including the new downtown ballpark. But it was rejected in the face of opposition from local restaurants.

The new taxes would be taken to the Lincoln City Council for approval next year and would take effect, if approved, in 2011.

The city expects to collect about $1.5 million annually in state “turnback” taxes — a 70 percent share of state sales taxes collected at the arena and nearby hotels — to repay the general obligation bond.

Planners envision $100 million in private investment in businesses near the arena, including privately owned shops and restaurants, offices and condominiums.

Lincoln Traction, a private development partnership, was selected last year to spearhead the development of two oversized city blocks worth of retail stores, apartments and office space.

The private development would include one hotel to be associated with the arena, and the city would build three new public parking garages.

Wendy Birdsall, executive director of the Lincoln Chamber of Commerce, said the chamber’s 38-member executive board has unanimously endorsed the financing plan and plans to promote the proposal on the May ballot.

“The finance package is very creative, and it should be something that’s very palatable toward Lincoln taxpayers in this economy,” she said. “This is such an incredible project. It will pay dividends to us.”

Contact the writer:

402-473-9581, leslie.reed@owh.com

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