Common Council members heard a presentation by city staff and consultants explaining how the project could be funded, what the return on the investment would be, what the event center would cost, how it would be paid for and who would run and manage the project.
The hotel and event center project comes with about 300 to 350 construction jobs for about 12 to 18 months, 100 full-time hotel jobs, and 130 to 150 full-time jobs to event center. Staff also expect $7 million in new spending and 50,000 new visitors annually.
The hotel and event center would be on the corner of Gas Light Drive and Lake Avenue.
Funding the events center
While the idea of building an event center may have appeal to city officials, it does come with a steep price tag.
The total cost of constructing the event center would cost about $49 million. The remaining $6 million would pay for site improvements and project contingency costs. The city plants use $10.7 million in exiting revenue from its tax incremental financing districts to offset the cost of the $49 million building project, which would result in borrowing $40 million, said Stephen Friedman, of SB Friedman Development Advisors.
“Every publicly funded project has — in one way or another — multiple financing sources,” Friedman said. “In Cleveland they built the Flats, which had 35 different financing sources.”
The event center would be funded with a variety of revenue streams, including: a hotel incremental property tax, hotel occupancy tax, cell tower lease, anchor tenant capital contribution, ticket surcharge, intergovernmental funds, City of Racine Levy Contribution and other funding partner contribution
This includes collecting a total of $365,000 from City of Racine property owners each year for 30 years. If approved, City of Racine residents would see an increase of about 11.78 cents per $1,000 of assessed value. This means that City of Racine taxpayers who own a home valued at $100,000 would pay $11.78 per year for 30 years.
Parking revenue would offset loss
The event center would run at a loss between $266,000 to $388,000 for 10 years. However, the city’s parking revenue, which is expected to bring in $271,000 to $441,000, would offset that deficit. Currently the Racine Civic Center operates at a loss of about $219,000 per year. The parking revenue would offset a portion of those costs as well, said David Stone, vice president and market analyst for Hunden Strategic Partners.
“That means that nine out of the 10 years you would have less of a deficit from the Civic Centre than you have now,” he said.
The hotel part of the project would be funded by private dollars. The city plans to issue a request for quotes starting in July and hopes to have a preferred hotel operated by October.
Event center timeline
About 14 percent of the total cost of building the proposed event center would be paid for by City of Racine taxpayers. But city staff are recommending that the project timeline be slowed down to allow for more time to formalize needed partnerships.
“We wanted to show you all the complexities of this project, all the nuances to funding it… and once again, open up this process,” said Mayor John Dickert.
Consultants and staff plan to recommend to the Common Council that it approve a Business Advisory Committee to engage the business community around potential partnership opportunities.
“The community has asked for this repeatedly… where is the private sector in this situation? This is really slowing down the process to really start incorporating more of the councils thoughts and beliefs going forward,” he said.
The Common Council is expected to consider moving forward with finalizing partnerships on July 18 and vote on whether it wants to start phase II in December.
Read more about the facility.
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