Financing sets Bangor arena apart
Rendering/Coutesy Sink Combs Dethlefs Architects
A rendering of the proposed Bangor arena and convention center
In a resounding decision reverberating across the state, Bangor residents recently approved a $65 million arena and convention center, an economic development effort that has proven elusive elsewhere in Maine despite efforts going back more than a decade.
So what was so different about the project that garnered 3-to-1 support in such a tough economy while municipalities like Portland and Lewiston struggle with ways to fund arenas and convention centers?
“They had the revenue stream that everybody else is looking for,” says Lincoln Jeffers, Lewiston’s economic development chief. In Bangor’s case, it’s from a racino.
Convention centers and arenas are much sought after, considered to be the building blocks of economic development. The difficult part is how to pay for them.
“It puts you in a whole different short list for attracting events and activity that your
community wouldn’t otherwise be able to attract,” says Greg Mitchell, director of the economic development division for the city of Portland. “A well-rounded community that has different sports venue facilities, event centers and conference centers opens the door to attractions and puts you on the map as a destination point that you otherwise wouldn’t be.”
A 2010 impact study performed as part of Bangor’s due diligence into its arena and convention center projected that the Penobscot County region could see an annual influx of $26 million in direct and indirect sales with a new facility.
But communities like Bangor, Lewiston and Portland have largely balked in the past at building large convention centers on the backs of local property taxpayers.
A dozen years ago, the city of Portland turned down an offer of $20 million and seven acres of land for an arena after officials determined municipal coffers couldn’t cover the millions of additional dollars the project would need to see it through.
And discussions in Bangor about the prospects of replacing its aging auditorium — built in 1955 — began in 1998, although rumblings of such changes were heard earlier.
“The roadblock has always been how will we pay for it,” says Bangor Finance Director Debbie Cyr. “The cost of this project can’t be borne by the taxpayers.”
So in pressing forward for new facilities, the Queen City sidestepped that stumbling block. To cover the cost of the 30-year bonds, Bangor intends to use revenues it receives from racino Hollywood Slots, which are now $2.4 million annually, but which Cyr conservatively projects will increase 1.5% and cap out at $3.4 million annually. For part of the bond issue, Bangor will also use $750,000 annually from its downtown tax increment financing district, money it receives from new or expanding businesses in its downtown.
Since 2003, the city also has socked away some of its racino revenues into an arena account that stood at $8.1 million by the end of March.
Bangor is in an enviable position.
Had such financing been available to Lewiston, development of its Bates Mill complex acquired through tax deficiencies in 1992 likely would have been further along and the city would perhaps now have its own arena. Despite this lack, about 40% of the 1.2 million-square-foot complex has been redeveloped, infused with new life through banking operations, restaurants, a brewery and professional offices. Another 60,000 square feet will be renovated this summer for 48 units of mixed-income housing.
But a major sticking point has been what to do with Bates Mill No. 5, a two-story 345,000-square-foot building where once bedspreads were made. Because of its size and location, it repeatedly was identified by studies dating back to 1997 as a prime location for a convention center.
But momentum for a new center slowed in the wake of rising costs and concerns.
Faced with a $45 million-plus price tag to renovate, Jeffers says, and an estimated operating deficit of $500,000 in the first two years, city officials in 2008 curbed the convention center project.
Lewiston sought unsuccessfully for federal assistance and alternate sources of funding, including a local-option sales tax. Jeffers says state discussions in the last decade about the possibilities of a local-option tax to assist funding fell flat.
Falling short of funds
No one is perhaps more aware of that than Joseph Boulos, a southern Maine developer who, in 2005, proposed an ambitious $250 million facility called Lincoln Center. The project included an arena, convention center, hotel, office tower and parking garage in Portland.
Boulos was banking on a local-option sales tax to help pay for the project, but to his chagrin, according to reports at that time, discussions on the local-option sales tax quickly evaporated and weren’t part of Gov. John Baldacci’s tax initiatives. The project never got off the ground.
“One way or the other, the Legislature is going to need to take action to allow communities to raise the revenues needed to cover the debt service on a project like that,” says Jeffers.
But not this session. State Rep. Gary Plummer, a Republican from Windham, sponsored LD 1213, which would provide local funding mechanisms, including a local-option tax, for a convention or civic center in Cumberland County. But Plummer now believes the bill should die, noting it is not the time to raise taxes.
Several proposals have been made in Cumberland County, including a privately funded $100 million combination hotel, arena and convention center for Thompson’s Point in Portland. In addition, a $28 million bond package to renovate the Cumberland County Civic Center is set to go before voters in November. Approval could scuttle a Westbrook developer’s plans for an 8,000-seat, 150,000-square-foot arena.
Taking its cue from successes in Bangor, Lewiston may have other plans for Bates Mill No. 5. Great Falls Recreation and Development LLC has a purchase option on the building and proposes to put in a casino. Great Falls is seeking legislative approval and has gathered enough signatures to put to a referendum vote in November.
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