Sunday, August 7, 2011

Promises Made Promises Broken

Monday, August 8, 2011, the City Council will take action to move the Mayor's Event Center plan to a public vote of the good folks of Sioux Falls.

Building an event center in Sioux Falls is an exciting project. However, the timing of this may likely fall to the uncertain times facing the economy and fiscal uncertainty facing our country and each and every citizen. This project will rely on the workhorse of the 2nd penny sales tax and growth projects that may or may not come to fruition. Authorizing the issuance of bonds financed by a hope that people will continue to spend and even increase their spending when Congress is grappling with trillions of cuts in programs that affect the economic well beings of citizens is gutsy.

Steve Hildebrand looked at promises made and promises broken by the Mayor and it is worth repeating here. When the Mayor was running for office, he had a campaign poster that stated he was committed to building a new event center but he wouldn't tear down Howard Wood Field and he wouldn't spend millions on added conference space and other frills. His campaign poster
boasted an affordable plan, spending $100 million with primary funding coming from private investment, entertainment taxes, and fees for users, parking and suite rental. He promised to build an event center Sioux Fals would be proud of and save the taxpayers more than $100 million. The estimated construction cost is now at $115 Million.

The financing package the Mayor is asking the City Council to send to the taxpayers is far from what he originally proposed. In the beginning, he talked about a $15 million down payment and using private money to fund the construction costs. Today's plan calls for no cash down payment and a construction cost $115 million covered by bonds obligated with the second penny sales tax revenues for the next 22 years. He promises that operating expenses will be paid with revenues and private money, not subsidized with general fund money.

He said the project would be Lead Certified Silver, however, now he will not do lead certified because of cost.

He said no paying for parking if it's at the Arena/Convention Center site. Now parking fees will be hidden in ticket prices.

He first said the bond debt would be $60-69.5 million and now the new debt is projected at $115 million.

He said there would be a $15 million down payment but the current financing plan doesnt include a cas down payment and requires the first two years to be interest only payments on the debt.

He promised to build an event center, balancing progress with prudence, compromise and common sense to get it done. Compromise and common sense is debatable.

He said the project would be designed for expansion but that is no longer the case.

No doubt the City Council will adopt the necessary ordinance and resolutions to bring this
plan before the voters on a November 8th ballot. I hope someone is keeping track of the
promises being made and the promises that have been broken. I hope what has happened so far is not a predictor of the future.


  1. The mayor's Event Center financing plan sounds like the "Buy now, Pay later" philosophy of the banking/credit card industry at First Premier & Citi where he developed his so called "Business Acumen".

    One only has to read the list of bankrupcies that are in the paper almost daily or consider the financial problems of the federal government and several states to see that this is a bad idea.

    Wake up "Good Citizens of Sioux Falls"! This is a bad plan. The total cost of repaying this $115 million LOAN over the next 22 or more years will be much, much more with INTEREST added.

  2. It's also worth noting that this plan's financial projections are based on extremely optimistic 1 year projections from SMG & Global, one of which will get the contract to manage the whole facility.

    These contracts typically cover the management company, even if the place loses money like both the Arena and Convention Center did last year.

  3. I agree with Arby - even if you were to ignore/throw out the current state of the economy, this is an absolute financial boondoggle! Here's a question - where are the resident Tea Partiers and other financial conservatives right now? Talk about misspending gov't money!!!