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Tuesday, March 20, 2007

Event Centers: Madison vs. Mitchell

The Mitchell Republic (link here, but I can't guarantee it will stay active) reports on a proposal from a city-appointed task force to build a 7092-seat, 100,000 square-foot, 25-million-dollar event center. The goal: "put Mitchell on the map again for hosting state tournaments." No malarkey about "giving Kernel Pride a home" or "meeting the needs of ALL activities"; Mitchell's event-center task force makes clear they are gunning for the big bucks of the South Dakota High School Activities Association state tournaments. Evidently, the SDHSAA ruled in 2005 that the fabled Corn Palace's 3200 seats aren't big enough for the state tourneys and took Mitchell out of the rotation for those events. Says Jim Johnston, task force member and owner of Harve's Sport Shop (ah, the synergy of interests):
“I’m personally sick and tired of seeing Aberdeen have a boys’ basketball tournament, a girls’ basketball tournament and a state wrestling tournament all in the same year....It’s time we get the stuff back here.”
(I guess if Aberdeen were beating my town, I'd be rankled, too.)

So let's compare the Mitchell task force's proposal for an event center with the Madison athletic supporters' proposal for a new gym:








MitchellMadison
Cost$25 million ($19.5M for construction; $5.5M for architecture fees and site acquisition$5.83 million
Footprint100,000 sq ft42,400 sq ft
SiteNo formal site proposed, but two possibilities:
(1) Route 37 bypass -- good traffic access
(2) downtown -- good business for local restaurants
Attached to Madison High School/Middle School complex -- convenient for students, but at far northeast edge of town, away from highway and businesses
Estimated economic impact$18-$22 million$1.5 million
Ratio of project cost to economic impact (larger number = less bang for the buck)1.4:1 to 1.1:13.8:1
Proposed fundingCity property tax increase: $10M
Bonds financed by city second-penny sales tax: $12M (city benefits, city pays)
New "Business Improvement District" imposing $2 tax per hotel room: $3M (visitors benefit, visitors chip in)
Offset/additional funding possible through sponsorships and private donations
School district property tax increase: $5.83M
Funding through new taxes40% from property owners, 12% from visitors100% from property owners
Funding for maintenance costsHalf of BID revenue set for maintenanceunknown -- likely from school district budget

Note that Mitchell's economic development proposal derives a significant chunk of its funding from existing tax revenues. Taxpayers are still shouldering most of the cost, but the Mitchell task force is looking for ways to shift more of that burden to those more directly interested in/benefiting from the project. If the Madison boosters took that tack by putting more private donations and user fees on the table, they might garner more yes votes on April 10.

3 comments:

  1. Cory, I just returned home from the Grand Island Chamber of Commerce's annual meeting, in the brand new Heartland Events Center

    The arena and convention center was built after voters twice rejected such a facility.

    How'd they do it?

    They raised about $25 million in donations. They have corporate sponsors and got bigwigs to open their checkbooks. They also got the small and medium donors -- folks who sponsored a seat, or those who just chipped in $25.

    But that still wasn't enough.

    But the hotels wanted a facility to host conventions and sporting events. So the hotels pushed for a 2% lodging tax.

    With that, the arena opened nearly debt free last fall.

    Already it has played host to several rock concerts, dozens of trade shows, rodeo, monster trucks, etc.

    And I like how property tax payers aren't bearing the burden.

    I was glad to see Mitchell is spreading the tax burden. And I can see where their proposal will bring in state tournaments and $$ for local businesses.

    What will Madison's proposal do?

    ReplyDelete
  2. Not sure if my previous post made it thru or not. But just one point I want to make again in case it didn't. The estimated economic impact cited here was $1.5M to the Madison community, a figure taken from the gym committee's own pamphlet. However, at the meeting tonight the gym committee admitted this was not a true figure. Madison would not get peewee hockey or cheerleading, which alone removes $200,000. The others were merely estimates based on other cities' expereinces but they didn't think Madison would ever see that much money. They would see some, but not this much.

    For one thing, someone in the audience brought up that Madison does not have the motel rooms available to house as many visitors as would be necessary for some of these tournaments. To which one of the committee members said that if we built the gym then a motel chain would probably see the "many people" this new gym would attract with weekend events and would plop down a motel in Madison! What???? When the committee had just admitted that we wouldn't get that many weekend tournaments anyway!

    I think it is really disgusting that the committee will use blatantly untrue facts or skewed reasoning as above to further their cause. But I guess they think it is good P.R. (and it probably is because most people won't know it's untrue). And the simple fact is that these are admitted basketball junkies for the most part who want more seating to watch their baseketball games. So let them pay for it then!

    Especially irritating is the guy who will pay $0 for the new gym but is one of the committee's main spokespeople on how everyone else should be overjoyed to pay for it!

    ReplyDelete
  3. One other thing. The committee claimed that they were told by the city finance officer that use of part of the second penny sales tax to fund this was not "feasible" because the gym was not a joint use venture. But the truth is that:

    1. The community center was paid off early so there is extra money being taken in by the second penny sales tax which is just sitting there to be used by Madison for economic development.

    2. This new gym is being touted as benefiting Madison economically by making Madison more attractive to potential businesses seeking a place to locate.

    3. This new gym is being touted as being economically beneficial to the city of Madison by bringing in more tournaments and activities and thus more people spending money in town (although they admitted their figures for such benefit are inflated and misleading).

    4. Therefore this proposed new gym meets the criteria to use a portion of the second penny sales tax to pay for part of its cost. How can the city commission justify not doing so?

    Maybe it's not "feasible" for just a certain part of the taxpayers to shoulder the majority of the cost of a new gym while never realizing any economic benefit from it. Maybe we should be able to just say we won't fund it either.

    ReplyDelete

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