Council votes 4-3 for added costs
After a heated debate, the Kent City Council voted 4-3 on Tuesday night to approve a $5.9 million budget increase for the Kent Events Center.
Councilman Les Thomas compared the debate to when the Council voted 4-3 four years ago to sell 10 acres to a developer to build the Kent Station shopping mall.
“Four of us took the position (in favor) of the downtown station and that proved to be extremely great,” Thomas said before he voted with Council President Debbie Raplee, Ron Harmon and newly appointed Jamie Danielson in favor of the cost increase.
City staff asked the Council for a budget increase to $84.5 million – from the center’s original price tag of $78.6 million – to fund additional costs and features at the site.
Most of the project funds to build the arena will come from city-issued bonds that would be paid back over the next 30 years from fees collected from events and activities at the center.
City officials are saying the center would bring another $400,000 in additional revenue each year due to the new features. That’s according to Ben Wolters, the city’s economic development director. Those features include a center scoreboard to be financed through businesses by advertising space on the board, an enhanced suite lounge and padded seats in the general-admission area. Every $100,000 translates into $1 million in bonding capacity, which creates the additional $4 million in revenue that the city can use toward the project, Wolters said.
The remaining $1.9 million of the extra costs will be funded through the city’s capital improvements budget, to the tune of about $180,000 per year.
Council members Deborah Ranniger, Elizabeth Albertson and Tim Clark voted against the higher price tag.
“I can’t support this debt and the potential lack of revenue is like debt,” Albertson said during the debate. “It’s like the city of Kent maxing out on a home-equity loan. I want to open the events center with bells and whistles and something we can be proud of. But I also want to take care of everything else.”
Harmon spoke of going the course with the project, to ensure a high-quality venue.
“If we start a project, we have to finish it,” Harmon said. “And we want a first-class project. We do have to prioritize what we can afford to build. This is priority one.”
Ranniger expressed doubt about the need to spend extra money on padding for arena seats and better floors for the locker rooms.
“We’re pushing this out beyond my level of comfort,” Ranniger said. “Some items we have to do. Other items would be nice to do. I could live with about half of the items.”
Ranniger also was concerned – especially, she said, in uncertain economic times – about capital projects that might have to be put on the back burner by the city if revenue for the arena comes in lower than anticipated.
“Whether it’ll be water, sewers or transportation, those are the things I hear from the community that we need to address,” Ranniger said.
Raplee remained confident in her vote to approve the budget increase.
“When we started the project, it was at 80 percent design to gain time for the work to be done,” she said. “To ask for $6 million is a pretty small amount.”
Clark opposed the additional costs because of the potential impact on other projects if revenue forecasts come up short, he said.
“It will become a liability should the revenue not match the debt and that will fall out of the general fund,” Clark said. “It’s not a bad risk if it was the only issue the city was facing. But we have flood-control levee repair that is not going to go away and could cost anywhere from $10 million to $20 million.”
Danielson, appointed last week to the Councilto fill the vacancy left by the April 30 death of Councilman Bob O’Brien, was sworn into office about 90 minutes before her first vote, which was a “yes” on the event center cost increase.
“I understand the risks we’re taking on bonds, but I see the long-term revenue potential,” Danielson said. “I was not here (last July) to approve the 80-percent design, but I think we should do the 20 percent left correctly.”
The cost increases passed muster two weeks ago with the city’s operations committee on a 2-1 vote. Committee members Raplee and Thomas voted yes. Clark voted no.
City Finance Director Bob Nachlinger said after the meeting that the “sky would have to fall really hard” for the city to run into problems paying back its debt on the bonds. He said the city pays about $11.5 million per year to debt service. The extra $6 million for the arena will increase that amount by about $500,000 per year for a total of $12 million per year.
“I share the concerns (with a couple of Council members) that the economy is not doing very well,” Nachlinger said. “I’m just not as concerned.”
The Seattle Thunderbirds minor league hockey team will be the anchor tenant of the facility. They plan to move next January to Kent from their current home at KeyArena in Seattle. The city of Kent has a 30-year lease with the Thunderbirds.
Besides 40 Thunderbirds games per year, concerts, trade shows and other events also will be lined up for the 154,400-square foot facility, expected to generate $34 million per year to the Kent economy.
The 6,025-seat arena is presently under construction at West James Street and Fifth Avenue North. The project is about 60 percent complete and on schedule to open Jan. 2, 2009, Wolters said in his report to the Council.
In addition to city bonds, the state will pay nearly $21 million toward the arena through formation of a Public Facilities District that will enable Kent to keep 0.033 percent of the state’s share of sales tax, or 3.3 cents on every $100 purchase, collected in the city.
The Council approved construction of the events center last July on a 6-1 vote. Costs of the project jumped $2 million since then, Wolters said.