The City of Bettendorf's new downtown Events Center will cost more than $40 million under a financial loan package recently approved by the city council.
The 20-year $13.8 million loan to finance the city's portion of the 53,000-square foot-center will cost the city at least $14.785 million in interest. And, with a five-year adjustment clause on interest rates, the price could go much higher if bank interest rates go up over the next 20 years.
The rate on the loan can go from the current 7.5 percent and 5 percent for the taxable and non-taxable portions of the bond issue to as high as 15 percent and 12 percent, respectively, in the event interest rates increase during the life of the loan. The rate adjustment is permitted every five years.
When factoring in the contributions from the Isle of Capri ($4.37 million), the Scott County Riverboat Authority ($3.3 million), Vision Iowa ($4.1 million), a federal grant ($250,000) and Scott County ($225,000), the Events Center price tag will exceed $40 million.
The city is counting on Tax Increment Financing (TIF) from the Isle's new hotel, $550,000 a year, to pay the bulk ($19.25 million) of the principal and interest costs for financing the center. In essence, tax revenue from the Isle hotels will be used to fund the facility construction rather than going to the city's general fund to pay for overall city expenses/improvements.
While the city will own the center, its use of the facility is limited to only a few days a year and those must be on weekends. Because of its limited use to the city and lack of a public purpose, the city was unable to issue general obligation bonds (backed by the city's general tax revenue) which typically have lower interest rates than revenue bonds (backed by revenue from the specific project) used for the events center financing.
As part of the financing package, the Isle agreed to a minimum assessment of its property ($32 million) and to reimburse the city for any loss of tax revenues if the hotel TIF revenue isn't sufficient to cover the city's financial pledge for the Events Center project's principal and interest costs.
In addition to the Events Center, the project includes a third deck on the Isle's parking ramp, completed in 2007, and a skyway to connect the Isle hotel/casino to the center.
For a copy of the Isle agreement and loan information, CLICK HERE.
