BRADENTON, Fla. — The economy as well as oversight and contractual problems have delayed Orlando’s effort to build a $425 million state-of-the-art performing arts center.
Since the Florida city’s community redevelopment agency sold $126.8 million of tax-increment finance bonds in 2009 and 2010, about $41 million has been spent on land, consultants, design, and other contracts.
No physical construction has started on the Dr. Phillips Center for the Performing Arts.
The city and Orange County, both major funding partners for the DPAC project, have now put together a new oversight committee designed to move the project forward.
The total project as originally envisioned encompassed a 2,700-seat hall for large Broadway productions, a 1,700-seat acoustical theater for symphony, opera, and ballet, a 300-seat community and multi-purpose theater, as well as various support features.
Because of the economic downturn, and its impact on revenues, the project went to a phased approach, with the first phase estimated to cost $282.6 million for the 2,700-seat hall and the 300-seat community theater.
Even with TIF financing, donations raised by the private nonprofit Orlando Performing Arts Center Corp., state grants, and other revenue, it has been known for some time that funding to complete phase one would come up $31 million short. More bonds may also need to be issued in order to complete the project.
Earlier this year, Orange County was asked to provide a $31 million bridge loan for the project.
It was one of the first requests to land on the desk of newly elected county Mayor Teresa Jacobs, who was sworn in Jan. 4.
Jacobs launched a review of the project with help from the Orange County comptroller’s office.
The review raised “serious financial and construction-related concerns about DPAC,” particularly about the way the arts center’s contracts were structured, Jacobs wrote to Orlando Mayor Buddy Dyer.
The review also found higher-than-anticipated overhead, administrative, and land costs.
The contracts were negotiated by the Performing Arts Center Corp., which will also run the facility after its opening.
The questions raised by the review of the project led Jacobs and Dyer last week to announce that a new nonprofit Community Construction Corp., will be created to oversee construction and develop a guaranteed maximum price for phase one of the project. The CCC also will renegotiate some of the existing contracts for cost savings that may close some of the $31 million funding gap.
The Performing Arts Center Corp. will continue fund-raising, including a required endowment for operations, though that effort has fallen behind because of the economic downturn.
“This new organizational structure creates a framework to ensure adherence to the guiding principles of accountability, transparency, and fiscal responsibility,” Jacobs said. “My goal has always been for this community to have a world-class performing arts center. This framework places us in a much better position to understand what it will take to get the project built right with proper oversight.”
The CCC will have a board of appointees consisting of the major funding partners — Orlando, Orange County, the CRA, and the Performing Arts Center Corp. — as well as appointees from some of the region’s largest employers and community contributors, including Walt Disney Co. and the Orlando Magic basketball team.
“This collaboration among the city, county, the performing arts center team, and our donors represents the power of a strong public-private partnership and will help move the project forward,” said Jim Pugh, chairman of the Performing Arts Center Corp.
Officials said the design of the performing arts center is nearly complete, and work will now focus on developing a transparent management structure and a “fiscally prudent” construction plan.
As the scope of the final project becomes clear during this process, the final plans and costs will be released to the public.
“The formation of the CCC is an important step in realizing the vision for a new performing arts center for our region,” Dyer said. “We are committed to partnering together to jointly identify solutions to ensure the performing arts center is developed in a viable, fiscally responsible manner.”
To support phase one of the project, the Orlando Community Redevelopment Agency sold $71.4 million of TIF revenue bonds in 2009 and $76.17 million of TIF bonds in 2010. About $122 million of the debt was sold as taxable Build America Bonds.
While revenues in the TIF district have remained relatively flat, there are no reports of debt-service payment disruption on the Municipal Securities Rulemaking Board’s EMMA system.
The TIF bonds are rated A by Fitch Ratings and Standard & Poor’s and A2 by Moody’s Investors Service.