A new bond-issuing authority that is a partnership of the University of Nebraska and the city of Lincoln plans to come to market next month with up to $100 million of Build America Bonds to finance a new arena.
The authority plans to sell the debt competitively in August. It’s expected to sell another $100 million of bonds before the end of this year, including roughly $30 million of recovery zone economic development bonds.
Ameritas Investment Corp. is the city’s financial adviser. Gilmore & Bell PC is bond counsel.
Proceeds from the bonds will help build a $344 million arena on a stretch of blighted rail yard west of downtown. Voters authorized part of the bond issuance in May.
The three-member joint agency, made up of Lincoln’s mayor, a City Council member, and a member of the university’s board of regents, authorized the bonds last Thursday. The authority expects to issue taxable 30-year BABs, according to local reports.
The bonds will feature a pledge of triple-A rated Lincoln’s full faith and credit.
The publicly financed side of the development includes the new arena as well as new roads, parking lots, and an outdoor festival space. The privately financed piece of the plan features a new hotel as well as retail, residential, and office space.
The city would rent the arena to the university, which would have its Huskers’ basketball teams play there for the next 30 years starting in 2013.
Under the current finance plan, the joint agency would issue a total of $200 million this year — using a portion of the proceeds to fund a debt-service reserve fund — followed by $120 million of issuance in 2012. A final series of $24 million would be issued in 2013 when the arena and new hotel are scheduled to open, city officials said in previous interviews.
To pay off the debt, Lincoln will raise its sales tax rate on bars and restaurants by two percentage points, pushing the rate to 9% from the current 7%, and by four percentage points on hotels and car rentals.
Other revenue sources backing the debt include arena and parking revenue and so-called turn-back taxes, which are sales taxes collected by the state and given back to the city.