|By Richard Richtmyer, Anchorage Daily News, Alaska|
Knight Ridder/Tribune Business News
Jun. 25, 2005 - Anchorage officials are scrambling to bring together a financing package for the city's new convention center and hope to have the money to build it by this fall.
They're aiming to lock in low interest rates, which will enable them to get the most out of the hotel-tax hike voters approved last April to pay for the new center, Jeff Sinz, Anchorage's chief fiscal officer, said at an Assembly briefing on the project Friday.
City voters last April approved raising Anchorage's hotel-room tax to 12 percent from 8 to build and help operate a new 193,000-square-foot convention center on what is currently a downtown parking lot.
A newly created nonprofit group will sell revenue bonds to investors to pay for the project. The bonds will be repaid with revenue from the higher hotel tax.
Officials have estimated the project's cost at about $93 million, but the cash raised in the bond sale could be more or less than that, Sinz said Friday.
The city is committing the new hotel tax revenue to paying back the convention center bonds. If interest rates are low, as they currently are, that revenue stream would be enough to pay back more debt than it would if rates were higher, Sinz said.
Most financial experts agree that rates are going to rise, he said. "The real question has just become, 'When is it going to happen?' "
In today's bond market, Sinz estimates that the higher hotel tax would be enough to cover more than $93 million. For every half a percentage point increase in interest rates, however, that total would come down by about $5 million, he said.
That's why officials want to sell the bonds as soon as possible, and they're planning to market them by October at the latest. Initially, they had planned to sell the bonds next summer, Sinz said.
In the meantime, city officials, the developers and architects are working to bring all the project's pieces together. That includes refining the center's design and coming up with a final construction budget and schedule, Mayor Mark Begich said at Friday's briefing.
During the campaign, the architects who are designing the project had produced conceptual drawings and broad-stroke descriptions of the new center. They're finishing more detailed plans, and they plan to unveil them to the public during a series of forums early next month, Begich said.
Construction work is not scheduled to start in earnest until next spring, but there will be some signs of activity on the site starting next week. A contractor will be drilling holes to take soil samples, the mayor said.
Diamond Parking, in partnership with the city, plans to build a 650-space garage on the site of its 160-space surface lot at Seventh Avenue between G and H streets, kitty-corner to the convention center site.
The heavy work on both jobs is scheduled to begin concurrently, the mayor warned at Friday's briefing. "There is going to be one year of inconvenience," he said.
If all goes well, the new center is scheduled to open in 2008.
City boosters already have lined up a big event for the new venue.
The Aerospace Medical Association has booked the new center for its 1,600-delegate convention in May 2011, said Nance Larsen, the Anchorage Convention & Visitors Bureau's vice president of marketing.
The group held its convention here last summer, but the city's existing venue, the Egan Center, wasn't large enough to handle it all and it spilled over into downtown hotels, Larsen said.
The bureau had since been coaxing the group to return. It finally committed last spring, after the vote, Larsen said.
Officials say the new center will have about 93,000 square feet of meeting and exhibit space, more than double the Egan Center's 45,000 square feet.
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Copyright (c) 2005, Anchorage Daily News, Alaska
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