Youth sports is a $55 billion industry, with an economic impact greater than the NFL. The City of Macomb is looking to grab a piece of that pie with a new economic development project that's anchored by an 8.18-acre sports complex. On March 26, the City of Macomb and Macomb Economic Development Corp (MAEDO) hosted an open forum to share more about the proposed project and answer questions.
Over 100 residents, community and university leaders and city/county officials turned out for the event at the Spoon River College strategies to ensure a project is fiscally sustainable and financially successful.
'I am here to ensure that risks are mitigated for the community. This is not a strategy developed in a back room. It's a preliminary plan and we're here tonight to share the progress made to date,' he said.
Hansen pointed out the various funding sources totaling $70 million include donations (5-15%); grants (3-10%); other (2-5%); and revenue bonds (7090%). Approximately $69.2 million of the funding will be used for land/property and construction costs, equipment, 'soft' costs, as well as a contingency fund of around $4.8 million.
'We are factoring in costs for every detail, down to the stanchions used for volleyball nets. The revenue bonds are the largest funding source. These are fixed interest rate, long-term, typically 25-30year, non-rated, non-recourse bonds where the bond investors— seasoned, experienced large investment companies like Schwab or Chase—take on the risk,' Hansen pointed out. 'There is no risk to the city, the county or the school district. The bond holders are betting on the success of the venture. This safeguards the community as the investors take on the risks.'
Since revenue bonds will be the primary funding source, no property tax increases will be implemented to pay for the facility. The revenue bonds are a multi-layer approach, Hansen shared, which include business district sales and hotel taxes; Tax Increment Financing (TIF); STAR Bond revenue; city sales tax rebate; hotel occupancy tax rebate; and private fees.
Should the city receive STAR Bonds funding, those dollars will help pay for the development, and the sales tax established within that business development district will also assist with the costs, Hansen noted. The TIF district funding will also be used; however, Hansen stressed it will not be at the expense of other businesses not located within the new development district. TIF funds dedicated for downtown businesses will not be impacted, nor will those funds that are set aside for other development in different parts of the city be used.
'The financial strategies are still considered preliminary and are continuing to evolve,' he said. 'We're running multiple scenarios, and the STAR Bonds will dictate if this moves forward. There's still a lot of work to do.'
Following Hansen's presentation, the mayor and Hansen answered several audience questions, including what would happen if the complex failed and what the city would do with the empty buildings. Inman and Hansen reassured the group that the bondholder investors, not the city nor residents, would be responsible, or assume the risk. Regarding the addition of a public pool and its construction timeline, Inman estimates three years. Without this site and plan, construction would take at least two years and the cost to the city could be significantly higher, if the pool were independent of the complex, he noted. Other questions related to the city's current infrastructure being able to handle the project, with Inman explaining the city has maintained its infrastructure and has a sound infrastructure in place to support the complex and the ancillary development. There was also a question surrounding operating losses within the first few years. Hansen explained that projects take time to ramp up to success, and the budgets account for operating losses as the project stabilizes and continues to grow.
In addition to the March 26 open forum, the City of Macomb has a feedback form, along with complex information, at https://cityofmacomb.com/cityofmacombproposedsportsfacility/
