Tuesday, June 28, 2011

Where is the Event Center Project in the Recommended Capital Program?

The mayor presented the finance package for the Event Center. I don't know about all of you but I am still scratching my head about it. I understand that the city will authorize the sale of bonds to finance the construction of the event center. The construction debt will be retired using the 2nd penny sales and use tax for the next 22 years. 

The mayor intends to fund the entire construction project, estimated at $110 million, with bond proceeds paid back with the 2nd penny sales and use tax. Within the proposal there will be no down payment on the debt and the first two years' payments will be interest only. Let's hope we see the projected sales tax growth over the next five years  so the city can make the payments when they come due. If there's a shortfall, the city will have to rob Peter to pay Paul. That means the current obligations of the sales tax dollars for capital projects may have to be reduced.

It is hard to get a handle on the financing of the event center until the city authorizes the bonds. Financing the event center bonds with 2nd penny sales and use tax does not require a vote of the public. Can the council refer this to a vote of the people? Is the public the only one who can petition it for a vote?  The ordinance, authorizing the debt, will address how much the bonds will be, what the money will be used for and what funds will be used to pay back the debt. All ordinances of the city are referable to a vote from a petition of the public.

In the 2012-2016 Mayor's Recommended Capital Program's summation, the event center bond debt payment was identified as follows:
  • 2012: $4,200,000
  • 2013: $4,600,000
  • 2014: $5,900,000
  • 2015: $6,900,000
  • 2016: $7,900,000
This summation does not meet the charter requirements for the event center capital program.

The City Charter requires that these items be addressed:

Section 5.11. Capital program.
(a)Submission to city council. The mayor shall prepare and submit to the city council a five-year capital program no later than July 1 of each year for consideration.
(b) Contents. The capital program shall include:
(1) A clear general summary of its contents;
(2) Identification of the five-year goals of the city;
(3) A list of all capital improvements and other capital expenditures which are proposed to be undertaken during the five fiscal years next ensuing, with appropriate supporting information as to the necessity for each;
(4) Cost estimates and recommended time schedules for each improvement or other capital expenditure;
(5) Method of financing, upon which each capital expenditure is to be reliant;
(6) The estimated annual cost of operating and maintaining the facilities to be constructed or acquired;
(7) A commentary on how the plan addresses the financial sustainability of the city and the region of which it is a part; and
(8) Methods to measure outcomes and performance of the capital plan related to the long-term goals of the city.

The above shall be revised and extended each year with regard to capital improvements still pending or in process of construction or acquisition

There is nothing in the CIP that identifies the project costs for the new Event Center. The Event Center project sheet just lists $500,000 for 2012. There is no identification of the estimated impact on operating expense for the Event Center. Here is the event center project page in the 2012-2016 Mayor's Recommended Capital Program:









This project will provide funding for the planning and design

of an Events Center. Debt service payments are based on estimated project

costs of $110 million.

CONFORM TO COMPREHENSIVE PLAN: In Conformance with the Plan

STATUS OF PLANS: Nothing Done Except This Report


PROJECT CATEGORY: New Building/Land and Improvem




YEAR: 2012 2013 2014 2015 2016


ST SALES TAX 500,000



The finance director did say that the city intends for the naming rights money to pay for the operating expenses of the event center. If that money is not forthcoming in a sales push by Superlative or some other consulting company hired by the city, where will that money come from?

At this point, the public really doesn't know what the cost will be until that ordinance authorizing the debt is before the council for adoption. That's where the details will be outlined.


  1. I love how the mayor touts his excellent buisness acumen. Is it really good business sense to take the city into 22 years of debt at 6 million a year? We all know it is going to cost more than that to build this POS. He made his mark getting people into debt at his previous job and now he can't help himself in doing the same to us. The city has done just fine without a new events center. Mayor - do what government is suppposed to do; provide good roads and infrastructure, good clean water, good police & fire protection, nice parks and libraries, etc... If bringing "business acumen" to city government means borrowing $120 million dollars then I'm out.

  2. Agree completely with the previous comment. This is a BAD PLAN, NO THANKS!

  3. This guy is unbelievable. Depending upon the day and his audience, he will say just about anything to appease. Broken campaign promises aside (there are several) here are a few incosistencies for the week.
    1. Campaign Promise and "Early Vision" - EC will not cost more than $100 million. Now he is asking for $110+ million.
    2. "Early Vision" called for cash reserves of $15 million to be utilized as a down payment. Now he wants to bond the entire project and put nothing down....great business acumen.
    3. "Early Vision" called for private donations of up to $25 million to subsize costs. Those have not come to fruition because he has not rallied business community to support this terrible mistake.
    I would love to have these questions answered, sans hand gestures and general grandiose statements about Sioux Falls.

  4. it is too bad this project is continuing to be a muddled mess. i agree with the statement "infrastructure needs come first."
    I also agree that "sioux falls needs to move forward." i think we can do both. the financial unrest in the entire country is playing out in sioux falls. borrowing money is not "in" right now, and may not be until congress gets the debt and deficit under control. i am disappointed the mayor and his staff have not presented an operating budget during and after construction. a key element to the discussion and decision by the council and us. i am not concerned about the possible increase in cost of construction. inflation and a contingency fund are part of any big project. i am concerned the second penny sales tax revenue projections are too optimistic. i know we will never default on a bond obligation. i am concerned about the future of
    important street building, rebuilding, and repair projects. i hope the council does intensive due dilegence, and can give us a solid recommendation very soon. it is also my hope we don't beat each other up, and create deep wounds in the community. in the 70's and 80' sioux city didn't stand still, they went backwards, because of infighting. it has taken years for them to get back on track. let's make sure we don't derail sioux falls in this process.

  5. We should know: what it will cost to build - to include any private land purchases that come off the tax rolls, all utilities, streets and parking. What does it cost to run, to include ALL costs. Lay the whole thing out like it was a bussiness descision not a suguar coated version for the unwashed electrate to digest.

  6. Doesn't anyone up at City Hall read the City Charter?

  7. CIty Hall is so out of touch with the Charter - they have totally not followed it and if someone were to challenge them, they would have the mayor's legal team and the ethics board there to back the mayor up - this whole thing is ridiculous - Recall time?