Saying the city cannot pay off a $5 million bond for an events center without raising sales or property taxes, Soldotna City Manager Tom Boedeker put a scaled down bond issue ordinance before the city council Wednesday night. The council passed the reduced bond ordinance of $3.5 million on a 5-0 vote. It will now appear on the October municipal election ballot.
Soldotna Mayor David Carey is planning a community forum to answer residents' questions about the bond issue, though a date has not been firmed up. The need for a convention, or events, center grew out of expansion plans for the Soldotna Sports Center and from two community economic development forums over the past year.
"The long and the short of it is the city cannot manage a $300,000 a year debt service without increased taxes," Boedeker said. "There's no way we can manage the debt service without cutting programs or reducing capital maintenance."
He said the most the city can afford is the debt service on a $3.5 million bond, which he proposed as a substitute for the original $5 million bond proposal.
"More than that, and no way, not without increased taxes," he said. "Property taxes would have to nearly double to pay for a $5 million bond. And I can't really reconcile that, and I don't think that would pass the voters."
Boedeker has publicly, though not formally, called on other communities in the central peninsula to pitch in on the proposed 20,000-square-foot facility planned for the vicinity of the sports center, which is now expected to cost more than $7 million.
Members of the Kenai City Council, during an informal poll by Kenai Mayor John Williams last week, said they would not be interested in going together with Soldotna on an events or convention center unless it was located nearer Kenai. Williams has long touted the bluff overlooking the lower five miles of the Kenai River as the location for a privately funded hotel and-or convention center. While several companies have looked at the property, according to Williams, the bluff erosion problem would have to be addressed before any new construction can be considered there.
Soldotna's vision of an "events" center would have five conference rooms, which could be combined to as few as two, to serve up to 500 people. The Soldotna council has been looking for a way to separate such formal activities as wedding receptions and business meetings from ice skating in the sports center. It is not uncommon for people in formal dress to share restrooms and common areas there with children dressed in full hockey regalia.
Soldotna council members were uncomfortable with putting an open-ended bond issue on the ballot and spent some time working out language to put limits on the ordinance.
Council member Mike Tarr proposed an addition to the ordinance that would prevent the city from selling bonds -- if approved by the voters -- unless the city was able to secure the other $4 million funding.
Boedeker recommended against going ahead with a different or scaled-down center if additional funding could not be secured, saying it would confuse the public.
Other than Boedeker's call for support from other communities, he nor the council have not discussed where the rest of the funding could be found.
Vice Mayor Jim Stogsdill asked if there would be any time limit on how long the bond sale could be postponed if it is approved by the voters. Boedeker said there are practical time limits based on how long after approval bond buyers would buy a bond.
"No one is going to buy a bond after three years," he said.
Boedeker said the events center would likely lose up to $130,000 a year for the first two years, combined with the loss of $20,000 a year in revenue taken from the sports center. The sports center already is subsidized to the tune of $120,000 a year by the city, though those revenues are made up through increased sales taxes collected from visitors to the city for events there.
With Anchorage looking at a huge new convention center in the future, the prospects for cities like Soldotna and Kenai hosting more smaller events, up to 500 people, grows more likely.
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