Batavia Park District to ask voters for money for rec center

How much will a proposed recreation center cost the Batavia Park District and its residents?

It's difficult to pinpoint. Final design plans have not been submitted, land hasn't been purchased, and legal agreements between the city, park district and a private developer for the complex proposal haven't been written.

Parks officials think they may need as much as $20 million to buy land and build a recreation center, plus pay for half of an attached parking deck at Houston Street, Island Avenue and Wilson Street. The project would also include stores and a land swap with McDonald's.

To show the developer they are serious about the project, the park district decided to go ahead with the financing part now.

That $20 million would be repaid over 20 to 25 years, park officials have said. Interest costs are estimated to add $11 million to the price tag.

District officials say the money would be repaid from memberships sold and fees charged to use the center.

"Any gap in the revenue-to-expense ratio for the operations of the recreation center would be incorporated into the park district operating budget and absorbed with revenues and/or cost containment through the operations budget," said Executive Director Mike Clark. The money would mostly come from the corporate general operating or recreation funds, he said.

The question to be decided by voters does not seem to bind the district to that nor does it restrict the location of the center. All the referendum question asks for is permission to issue alternate-revenue bonds.

There's a caveat that if revenues from the facility aren't enough, the district can use any of its "legally available" revenues to repay the debt. And if that isn't enough, the use of property taxes "without limitation as to rate or amount are authorized to be extended for such purposes."

That is required by law to cover costs in case something catastrophic happens that would eliminate revenue, like a fire destroys the center, said Daniel Johnson, an expert on municipal bonds.

The park district says it won't raise the tax rate to pay for the center. The rate is determined by the actual tax dollars the district asks for, applied to the value of property in the district.

The information sheets the district is presenting to the public say its calculations assume that the total value of property in the district will stay the same or decrease over the repayment period, and do not mention whether the levy will remain the same. Part of the levy is subject to a property tax cap, and Clark said that cap would prevent raising the levy more than 5 percent or the rate of inflation, whichever is less.

Opponents point out that if the debt is not extended by voters approving new bonds, and current debt is paid off, property taxes might decrease.

If voters do approve the plan, the district would try to borrow the money by Dec. 31, to use Build America Bonds. Those taxable municipal bonds feature a 35 percent rebate on interest, authorized by the American Recovery and Reinvestment Act of 2009. The program expires Jan. 1 unless Congress extends it.

According to a Wells Fargo index, the average Build America bond rate on Sept. 30 was 5.48 percent on 30-year issues, before any rebate.

In addition, the district is talking to Kane County officials about applying for an additional 10 percent interest rebate available if the money is borrowed through the county, which is distributing ARRA Recovery Zone money.

The referendum language does not bind the district to using Build America Bonds. It could issue traditional tax-exempt bonds.

The district has developed a business plan for the recreation center, using state and national industry standards. It has also researched budgets, fee schedules and financial performance reports of similar park district facilities.

Once an application is submitted for the project, it would have to be reviewed and voted on by the city's Historic Preservation Commission, its plan commission, the community development committee and the city council.

Community Development Director Jerry Swanson estimated that process could take up to six months.

Center: Business plan process may take six months