Bonding Package In Place
DDA Executive Director Verne Barry and then-County Chairman Steven Heacock each pledged to contribute an additional $5 million to the project last year when building costs topped the construction budget by $13 million. After slicing $3 million from the project, the $10 million promised by the entities closed the funding gap on the $212 million facility.
The DDA approved the issuance last month and city commissioners gave their approval the following week. The Convention and Arena Authority added its endorsement last week. And the county’s action completed the quadrangle of approval needed for the City/County Building Authority to issue the 20-year, $10 million package. The agreement also:
- Has Kent County pledging its “limited full faith and credit” on the bond issue, along with assuming the obligation for debt service requirements.
- Makes the DDA responsible for $5 million of the debt-service allocation.
- Makes the city guarantee the prompt payment of the DDA obligation.
- Makes the CAA responsible for all operating and maintenance duties for the new building.
County Fiscal Services Director Robert White felt that the state treasurer would approve the issuance of the bonds by the middle of the month and that the closing and pricing of the bonds would take place late this month or in early October.
Having the county back the package likely means the instruments will carry the highest bond rating available, which will save taxpayers some interest charges. The county will service its portion of the debt with revenue from the lodging excise tax, a 5 percent fee added to hotel and motel bills. Kent received $4.1 million in those receipts last year and had collected $1.98 million during the first half of this year.
At the start of this year the lodging excise tax account balance stood at $6.58 million. A projection shows that balance dipping to $996,500 in 2022, then rising to $5 million in 2030.
White estimated that the new bonds would cost the county about $400,000 each year.
The DDA will meet its obligation with local tax-increment revenues, as the board can’t use school tax-increment funds for debt service. If the DDA fails to make debt payments on time, the city has the right to intercept the local revenues and make the payments — which are expected to run nearly $400,000 annually.
The latest contribution from the DDA brought its commitment to DeVos Place to $10 million. For the county, the additional $5 million took its total financial support for the new convention center to just short of $90 million.
Kent County backed an $84.6 million bond package nearly two years ago and the bonds sold in less than a week in December 2001. The county is also meeting this obligation with lodging excise receipts. That package runs for 30 years and will cost the county $3.45 million this year.