City on the hook for $2.5M MetroCentre loan
News and notes from the Nov. 30 Rockford City Council meeting
By Stuart R. Wahlin
Rockford City Council approved a Finance and Personnel Committee report Nov. 30 recommending the city act as a co-signer for a $2.5 million note the MetroCentre is trying to secure with Pittsburgh-based PNC Bank.
Ald. Carl Wasco (D-4), chairman of the committee, explained the move is just part of the three-year MetroCentre subsidy agreement approved by aldermen in July. The agreement was based on the recommendations of an ad hoc committee studying the arena’s finances.
“In their budget is a line of credit for $2 million, which they already have in their budget,” Wasco reported. “The other is a $500,000 fund for if they need to book an act and pay up front. Then, they repay that at the end when the act pays off.”
The $2 million is, in part, a refinancing of the arena’s $1.2 million credit debt.
“Because of the finances going out in the world today, the city had agreed in that agreement that if they needed assistance getting that loan, as a co-borrower, that we’d agreed to assist them,” he added. “Because of the financial markets, they did in the end need our assistance.”
As terms of the deal approved in July, the city is providing $1.2 million for the arena’s 2010 fiscal year, which started July 1. Of that, $800,000 was to be disbursed immediately for operational expenses, with the remaining $400,000 to be paid Jan. 1, 2010.
For fiscal years 2011 and 2012, the city will provide the MetroCentre $1.1 million and $1 million, respectively.
Additionally, the city agreed to assume the MetroCentre’s $486,000 annual debt service payments, in addition to the $912,000 the city already spends to pay down renovation construction bonds every year. Also, a maintenance fund was established in the amount of $100,000 for the first year, and $200,000 for each of the remaining two years of the subsidy agreement.
In return, the MetroCentre was directed to cut $300,000 from its expenses, and to increase its revenue through higher fees and/or concessions prices. The arena has also been asked to pay off its $1.2 million line of credit in the next 10 years, and Mayor Larry Morrissey (I) said the MetroCentre plans to honor that commitment.
“The hope was that the MetroCentre, on their own, could go out and get private financing,” Morrissey responded after the meeting. “But realistically, given the real challenge of the capital markets today, we thought that was gonna be tough.
“They were having challenges getting a renewal, or an extension, expansion of their line of credit,” Morrissey added. “What this does is essentially fulfills a promise we made to the MetroCentre back in the summer…that if they weren’t able to get the line of credit executed on their own, that we would provide support for them.”
Morrissey said he doesn’t feel being a co-borrower will put the city at any greater risk than when the deal was first struck in July.
Ald. Linda McNeely (D-13) voted “no.” Ald. Doug Mark (R-3), a MetroCentre employee, abstained.
The council passed a resolution authorizing $250,000 of motor fuel tax (MFT) funds for work related to West State Street corridor improvements, between Kilburn and Pierpont avenues.
υ Approving an intergovernmental agreement with Chicago Central & Pacific Railroad for conduit work related to the Kishwaukee Street bridge at a maximum cost of $3,000 for the city. Aldermen later approved a license agreement for underground pipelines, cables and conduits with the company.
υ Approving a fiber optic purchase agreement with Omaha, Neb.-based MFS. Ald. McNeely voted “no.”
υ Approving a development agreement with James Diesing and Shirley Jean Duncan. Per the agreement, the city will extend public sewer to the developers’ tract of land in the Southeast Affordable Housing Tax Increment Financing (TIF) District, at an estimated cost of $30,000 to the city. In exchange, the developers have agreed to remove a modular home from property they own along North Second Street, and to give the land to the city. Ald. McNeely voted “no.”
Community activist Prophet Yusef spoke out against the costs of natural gas and electric utilities, especially because of their impact to people on fixed incomes.
“In the State of Illinois, they charge people over 30 percent of their income—people that are senior citizens, disabled people,” Yusef said of the utility bills.
Yusef urged the council to work with other legislators and the community to petition for fair rates.
“Get on Nicor, get on ComEd, because they’re overcharging these people,” he asserted. “These people barely make it.”
Ald. Lenny Jacobson (D-6) was absent.
From the December 2-8, 2009 issue