City officials are moving forward with a financing mechanism for the NexusPark fieldhouse, though one council member is concerned about the project’s price tag, which could include up to $29 million in bonds.
Columbus City Council has passed the first reading of an ordinance approving a lease with the Columbus Municipal Facilities Building Corp. to finance the fieldhouse project. The ordinance passed on first reading 6-1, with Councilwoman Elaine Hilber voting against it. Ordinances must be passed on two readings to be fully approved.
NexusPark is a joint venture between the city of Columbus and Columbus Regional Health to transform the former FairOaks Mall into a health, wellness and recreation center. As stated on the project’s website, the 150,000 square-foot fieldhouse will be a “sports and events venue that will host a multitude of different types of sporting and non-sporting events.” Officials have said in the past that the former Goody’s building area will be demolished to make way for the structure.
Hilber previously voted against appropriations for pre-construction costs on NexusPark in June of 2021 due to concerns about how Donner Center was not being prioritized and how the project might impact availability of funding for other endeavors.
“I do, obviously, think that this (NexusPark) is a great project,” she said at Tuesday’s council meeting. “… It’s something that I would love to see.”
However, she expressed concern about how lease payments on the fieldhouse might keep the city from being able to fund other projects over the next several years.
“I believe that we can still meet the capital needs that we do each year, which is between $9.5 and $10.5 million of capital citywide,” replied City Director of Finance Operations and Risk Jamie Brinegar. “And I fully trust that we will be able to do that. We will not be foregoing any capital for any department beyond what we are currently doing.”
Andrew Lanam with Stifel Financial Corp. said that the estimated maximum annual lease payment is $1.85 million, though the bond details will be finalized once the city knows more about the costs of construction. He estimated that the total cost of repayment, including both principal and interest, would be about $39.7 million.
The ordinance states that the Columbus Municipal Facilities Building Corp. was created to help the city finance facility projects such as this one. Therefore, city officials would like to enter a lease agreement with the corporation as the lessor and the city as the lessee. The city plans to pay for the lease rentals using a portion of the city’s Economic Development Income Tax revenues.
“We’re talking about using the city’s existing LIT (Local Income Tax) revenues to be the repayment source of the bonds,” said Lanam. “This doesn’t raise income taxes; the city doesn’t have the ability to raise income taxes. There’s no property tax back-up, so there’s no risk of anything going back on property tax owners. It’s using existing city funds to finance the construction of this project.”
The ordinance includes approval for the building corporation to issue lease rental revenue bonds in an amount not to exceed $29 million for the purpose of financing “all or any portion” of the fieldhouse project. According to Lanam, the estimated funds available for project expends would be $25 million.
“The proposed lease will have a term ending no later than 25 years beginning on the date of issuance of the bonds,” the ordinance states.
Lanam said that the proposed date of issuance is May 5, 2022, and lease rental payments are expected to begin in 2024.
“Under the lease rental structure, the city cannot actually start making the lease payments for the facility until it’s actually complete and usable,” he explained.
Bradley Bingham with Barnes &Thornburg stated that once the debt fees of the project are paid off, the property will revert to the city’s possession.
In addition to the proposed bonds on the fieldhouse, the city is also in the process of seeking to issue up to $11.5 million in parks bonds for administrative and recreation spaces for the parks department at NexusPark.
Parks Associate Director of Business Services Pam Harrell said that the cost of future work at Donner Center would probably be about $4.5 to $5 million “down the road” and be financed through additional park bonds.
“After this project, NexusPark project, gets going, we would then look at Donner Park, Donner Center, master planning around that down the road,” said Parks Director Mark Jones.
City officials have said in the past that the work on NexusPark comes first because that’s where the new parks and recreation headquarters will be located.
In regards to the fieldhouse, the city recently issued a Request for Qualifications for a design build contractor on the project. Executive Director of Public Works and City Engineer Dave Hayward said at a previous city meeting that submissions are due by 5 p.m. Feb. 18. The RFQ is expected to produce a shortlist of one to four contractors who will then be asked to participate in an RFP process and submit their actual bids. This is when the city will receive cost estimates, he said.
Ferdon said that the city expects to release the RFP by the end of February or early March and hopes to have a construction company under contract by late spring, with a goal to begin construction in the final quarter of 2022.
She said that while the end of 2023 is the city’s “aggressive” estimate for completion, it is likely to take longer because of supply chain issues.
The city is expected to have a public hearing and take final action on the lease ordinance at its March 1 meeting. However, the lease details may be revised later to match the debt service on the bonds.