Last Tuesday, Sioux Falls voted for a new events center now the city council will discuss how to pay for it.
The cost of the new events center project is $115 million, but the city finance director says they will be borrowing more than that.
For some voters it may be a little bit of a shock to hear that the city will be borrowing a grand total of $125 million to fund the new events center.
While that's $10 million more than the project's total price, city finance director Tracy Turbak says it's nothing out of the ordinary.
Sioux Falls will build its new events center with no money up front and without raising taxes.
In order to ensure the project doesn't backfire, the city must borrow more money than it needs, but Turbak says it shouldn't concern citizens.
"Interest rates are low right now, from a financing standpoint there hasn't been a better time to issue municipal bonds in the past 25 years." Said Turbak.
On the ballot, Sioux Falls voted for a $115 million events center but the ballot also read the city would be allowed to issue debt service reserves that aren't included in the total cost.
All in all, the city is borrowing an additional $10 million.
One million will be spent to cover the cost to issue the bonds and nine million will go into a debt service reserve fund to ensure that the city can pay back investors in a timely manner.
"That money will sit there for the life of the bonds and that $9 million will be used to make the final payment of the bond itself." Said Turbak.
Turbak says it also allows the city to get a lower interest rate on the investment and possibly pay it off sooner.
Borrowing $125 million may look like the city is spending more money but Turbak says this is common practice in city financing.
"every other sales tax bond the city has ever issued was done the exact same way, none of that money was spent on other projects, we legally can't spend that money on anything other than repaying the bonds." Said Turbak.
The final payment is set 22 years from now in 2033.
It may seem like things are moving quickly with the events center but it will take sometime for the actual wheels to start spinning.
There are several steps that need to be completed before construction begins.
The funding lanes have to be set up first, that happens Monday night with the first reading on the sale of bonds.
The council is expected to approve the sale of bonds at the November 21 council meeting.
The next step is the soil samples which will be taken in mid-December to determine how deep the foundation needs to be to support the building.
Then in January the team will give the go ahead to the construction manager.
Actual construction is slated to begin on August first next year.
Sunday, April 20 2014 10:30 PM EDT2014-04-21 02:30:09 GMT
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