11.16.2005 -- This memo is designed to update the Assembly on the latest developments in connection with the proposed new civic and convention center, and to outline the timetable for Assembly consideration of convention center agreements. The administration requests a work session on December 9, 2005, to brief the Assembly in detail on this project.

Overview

Progress is well underway in delivering a new civic and convention center on-time and within project funding limitations. During the next few weeks, we expect to reach a final agreement with the developers on the Guaranteed Maximum Price for the new center. Those negotiations have taken somewhat longer than anticipated because of the rapidly escalating price of construction materials, related in part to damage from Hurricanes Katrina and Rita. As the attached article from the Journal of Commerce notes, the cost of those materials, especially concrete and steel, are skyrocketing. However, working with the developers on some modifications of the project scope, we are confident we can build a state-of-the-art convention center which fulfills voter and Assembly expectations within the existing financial constraints.

Downtown parking progress

We also are making favorable progress to accommodate downtown parking needs. We are in the final stages of negotiating an agreement with JC Penney and the Anchorage Community Development Authority to renovate and manage the Penney downtown parking garage. This will make available up to 200 spaces for state workers displaced by the convention center, and will improve an under-utilized facility for general downtown parking. We recently announced plans to add nearly 100 additional surface parking spaces at 6th and C streets, across from the Anchorage Museum and the 5th Avenue Mall. This week the ACDA board is reviewing plans to proceed with a Request for Proposals for a new parking garage at 3rd and G streets. It is anticipated that in this December meeting they will formally move forward on this, increasing the organization’s proposed plan of 375 parking spaces for this site to 450 spaces. We also are grateful to our congressional delegation for providing $5 million toward a new 600-space parking garage at 7th and C streets. Our goal to add 1500 net new parking spaces is still on schedule.

Project Financing

This is a revenue constrained project, which means the project budget is determined by the ability of CIVICVentures to leverage a specific stream of anticipated revenues. The revenues are limited to the new 4 percent bed tax approved by the voters this past April, $500,000 per year in revenue from the MOA’s share of the current bed tax, interest income on project funds, and to the extent necessary, up to $500,000 per year from the Anchorage Convention and Visitors’ Bureau share of the current bed tax. Consistent with the Charter amendment approved by voters, no property tax revenue is used to fund the new civic and convention center. Just as the developers have worked to refine the project design and associated costs, the project finance team has worked to refine the project financing model to ensure maximum proceeds at minimum risk.

Convention center timetable

On December 2, the administration will submit for Assembly consideration and approval, an Assembly ordinance and memorandum authorizing the execution of three agreements in connection with the convention center. In addition, an Assembly resolution will be submitted authorizing CIVICVentures to proceed with the sale of tax exempt revenue bonds to finance the new convention center. We respectfully request final Assembly approval no later than December 20, 2005, in order to allow CIVICVentures to present the project to bond rating agencies during the first week of January and sell revenue bonds on or about January 24, 2006.

The agreements requiring Assembly approval are:

By ordinance, approval of three agreements:

• A new multi-year convention center management agreement between the MOA and ACVB providing for management and operation of the Egan Center and the new civic and convention center.
• A professional services agreement between the MOA and ACVB providing for the delivery of tourism promotion services.
• A long-term facility use agreement between the MOA and CIVICVentures. The use agreement defines the MOA’s use of the new civic and convention center, payment and use of anticipated bed tax revenues as approved by the voters last April, and the eventual transfer of convention center ownership from CIVICVentures to the MOA.

By resolution, authorization for CIVICVentures to sell tax exempt revenue bonds to fund construction of the new civic and convention center.