GRAND RAPIDS — What's in their capital replacement wallet?
Well, quite a bit — for now. In fact, members of the Convention and Arena Authority still should have $11.6 million stuffed in its wallet by the end of this fiscal year.
But 10 years later, at the end of fiscal year 2016, they should find that wallet considerably thinner — and they may even be staring at an IOU of more than $1 million for upgrades made to Van Andel Arena and
Repairs, replacements and improvements to both buildings have been projected to cost $20.3 million from fiscal years 2007 to 2016, while receipts during that 10-year period have been projected to be just under $7.6 million. That difference leaves the board looking at a capital-projects shortfall of $12.7 million over those 10 years.
But time may be on the side of board members.
The majority of the projects, $16 million worth, aren't scheduled to get underway until the plan's second half starts in fiscal year 2012. Over the second five years of the 10-year plan, roughly $3.2 million is projected to be spent each year through fiscal year 2016.
During that segment, net operating income and interest revenue — the receipts to be used for capital outlays — should only average $674,000 each year and result in an average yearly deficit of about $2.5 million for each of those five years.
For the first five years, from fiscal years 2007 to 2011, capital disbursements will average just $855,260 for each year and receipts will average $843,260. (See related chart.)
The first segment is expected to only lower the capital projects fund balance from $11.6 million to $11.5 million. But the second segment, when the buildings will be older with more wear and tear, is projected to wipe out that fund balance completely and add $1.15 million in debt to the CAA.
At the start of this fiscal year, which began on July 1, the capital projects account got a huge financial boost when the
Adding that figure to the $2.4 million left in the fund balance from last year, along with an expected $925,000 in income this year, should give the board about $16 million in the account during various times this fiscal year.
That amount will be more than enough to pay for up to $4.6 million worth of potential repairs, replacements and improvements listed in 33 projects for both buildings this year.
Twenty-one projects for the arena could total $1.24 million this year. Twelve of the 21 are marked as high priority items and are worth $800,000. The most expensive projects are installing new removable seats for the east tunnel at a cost of $200,000, remodeling the banquet rooms for $142,000 and upgrading the HVAC system for $137,000.
A dozen projects are listed for the convention center this year and all have at least some portion of those costs earmarked as a high priority. Up to $3.33 million could be spent on upgrades to
CAA members will see the 10-year projection for capital projects this week.
A Tale Of Two Segments
The Convention and Arena Authority needs to find an additional $12.7 million more than it has now by the end of fiscal year 2016 to meet the projected expenses for capital repairs, replacements and improvements expected to be made to Van Andel Arena and
The following chart breaks the 10-year capital plan for both buildings into two five-year segments. Projected receipts, which include net operating income and interest revenue calculated at 4 percent annually, and projected disbursements are presented for each segment, along with the fund balance for the end of each segment and for the end of the 10-year plan.
Source: Convention & Arena Authority Capital Repair/Replacement/Improvement Reserve, Projection of Receipts, Disbursements and Balances, July 2005