Dome Proposed Financing Plan

Summary

The City Council desires the project to be completed without an Ad Valorem (Property Tax) rate increase.  The following financial plan has been developed without the need for increases in property tax rate, and utilizes funds from 5 total sources:

  • Hotel Occupancy Tax (HOT) - 7% tax added to the nightly room rate paid for each hotel room in the City.  State law restricts the use of HOT money for projects related to tourism.  A Civic complex is one of the allowable expenses.  Money from Hotel Occupancy Tax also supports Chamber of Commerce tourism programs, the Friends of the Hutchinson County Museum, and the Tri-City Concert Association.
  • Venue Tax - A venue tax is a 2% tax added to the nightly room rate paid for each hotel room in the City.  A venue tax must be adopted by a vote of the community for a designated venue.  The City plans to call an election for the establishment of the Dome Venue.  The revenue generated by a venue tax can only be used for expenses associated with the venue.  
  • Tourism Fund Balance - Money in the Tourism Fund or the Capital Equipment Fund that has not been spent in previous years and is available for use.
  • Other Revenue - Other revenue would include private donations, support for other organizations (such as the BEDC), excess revenue generated by the facility itself or any other source that could be used.
  • Existing Property Tax Revenue - By restructuring debt, existing revenue may be used for this project without the need for a tax increase.  Property Tax Revenue will need to used in order for Bonds to be sold.  Without property tax backing, Bonds would not be able to be sold in the investment market and no funds would be available.  The venue tax election will call for an amount not to exceed 3% of property tax revenue to be used to help back the venue bond.  This will be existing revenue and the property tax rate will not be increased

Funding Details

The following details are preliminary and are based on initial cost estimates, funding costs, 7 year average of Hotel Occupancy Tax income and a 4% interest rate on debt.  Once debt has been issued, annual payment amounts will be fixed for the 20 year term of the debt. Current City debt was issued at a rate less than 4% and based on our bond rating, we do anticipate a rate less than 4%, however, conservative estimates have been used.  The proposed plan also assumes no increase in hotel occupancy tax income; however, the city has experienced an average increase of 4% over the last 10 years.  Number will be updated as the project continues to develop.  The current numbers represent the highest possible cost and the lowest possible revenue. 

Dome Preliminary Financing Plan


Dome Preliminary Annual Funding Plan