Resolution 5019 - Laserfiche WebLink

FINANCIAL ANALYSIS Introduction This financial analysis represents the fourth component of the four-part feasibility study. The purpose of this analysis is to project the level of financial support which will be required to develop and operate the facility, based on market analysis projections, projected cost analyses, and research on available funding sources. At the outset of this analysis, it should be recognized that the public sector typically plays the pivotal role in the financing of spectator sports facilities across the country. Even when there are significant private sector funds available, local governments contribute resources to such projects through tax abatement, infrastructure development, and other investments. Public entities make these investments for the sake of the direct and induced economic impacts expected from the project and for the intangible benefits such as the enhancement of residents' quality of life and the promotion of community identity. In addition, the economics of professional sports have evolved such that public funding is necessary for the new development of sports facilities to be possible at all. While, this analysis assumes that the City of Everett will play a significant role in the finance, development and ownership of the proposed facility, it should be noted that a State of Washington "Sales Tax Rebate" is available to county and local governments to support the development of public assembly facilities in the state. This ` tax rebate" allows that up to three one -hundredths of one percent of the Gross Sales Tax Revenues from a locality be transferred back to that locality for the development of public • assembly facilities. This analysis assumes that the City and other local partners (i.e., Snohomish County and the City of Marysville) shall employ this "tax rebate" as an additional source of revenue for the development and operation of the proposed facility. To understand thoroughly the financial implications of developing an indoor arena in Everett, the consulting team developed a comprehensive integrated financial model to analyze the project's feasibility. Exhibit 11 of this report contains the hard copy print-out of the financial model. Due to the volatility of the industry and circumstances outside the authors' control, projected results may vary significantly from the actual project's performance. Therefore, B&D cannot ensure that the results highlighted in this report will portray the actual performance of the arena; however, to identify the range of risk is inherent in the proposed project, the model allows for the testing of multiple performance scenarios to test the project concept under a variety of economic conditions. Executive Summary The basic findings of the analysis are as follows: • The estimated cost for the proposed arena facility is approximately $41 million, including $36.8 million in hard costs of construction, and $4 2 million in soft costs. These figures will vary depending on the type of financing implemented, land acquisition costs, actual facility design characteristics, and conditions in the construction market at the time of bidding. These costs figures do not include off -site infrastructure improvements these cost figures include interest costs based on tax- exempt debt. • Based on the "moderate" event calendar projected in the market analysis, and given standard and reasonable lease terms with the Brailsford & Dunlavey/Ellerbe Becket Page 35