DALLAS – The Fishers, Ind., city council approved $75 million in tax-exempt economic development bonds for a sports facility complex project being developed by a not-for-profit.
The city won’t be on the hook for bond payments. Instead the developers, GK Sports Development and Republic Development, are responsible for the payment of debt service on the bonds. The developers didn't respond to a request for comment.
The city council said at its Monday council meeting when it approved the bonding proposal and development plans for the complex that it “has determined that issuing the ED Bonds and otherwise incenting developer to construct the project is the highest best use of the property and is in the best interest of Fishers’ citizens.”
The developers may issue up to $75 million in bonds. The bonds would be sold through the city’s Economic and Community Development Commission.
City public relations director Ashley Elrod said the bonds are expected to close by the end of the year and construction is anticipated to commence shortly after. The estimated project completion date is Oct. 2018.
The Fishers Parks and Recreation Department will have an office in the complex. The lease agreement includes an annual payment of $803 million to be paid by project property taxes, park impact fees and ticket charges.
Fishers officials stressed the city isn’t on the hook to repay the bonds if the developers can’t. “The city is under no obligation to participate in the project beyond our lease agreement to rent hours of court time once the project is open,” said Elrod.
Other publicly funded sports facilities backed by a city pledge, such as an ice rink in Minnesota, have ended up in default. In 2013, the city of Vadnais Heights, Minn. canceled its lease and financial support for $27 million of bonds sold through its economic development authority to finance the construction of the Vadnais Sports Complex.
The bonds were supported by a lease agreement and repaid with those payments under the pact. As the complex struggled, the city subsidized debt service. The decision to renege on the lease, which led to a February 2013 default on debt service, prompted Moody's Investors Service and Standard & Poor's to strip the city of its investment grade general obligation bond ratings.
A not-for-profit entity known as Fishers Sports Pavilion LLC will operate the Fishers Sports Complex. Instead of paying property taxes, the organization will make guaranteed payments to the city of $600,000 for the first 10 years and $800,000 for years 11 to 20. The city will also get revenue from a $1 ticket surcharge at youth sports tournaments. The fee revenue is expected to total $150,000 to $200,000 per year.
The sports facility was put on hold 14 months ago because the developer had trouble raising money. On Monday the city council approved the financing and economic development plans.
The proposed complex will cover more than 504,000 square feet on 23 acres and will accommodate at least 31 different sports. The updated plans include 11 retail storefronts and a 120- to-140-room hotel. A 6,000-square-foot arena that could host a professional hockey or soccer team included in the original proposal will no longer be included.
S&P Global Ratings rates Fishers AAA with a stable outlook.