City streets are being sold, leased to pay for Ford Center updates. Here's what that means

EVANSVILLE — Ford Center needs a new scoreboard, and the city needs to pay for it. That's where the Evansville City Council's "creative financing" move during Monday night's meeting comes into play.

"Creative financing" is how city councilor Angela Koehler Lindsey, R-Fifth Ward, described the decision to sell and lease city streets to another arm of the city to be able to pay for up to $9 million in improvements to the arena.

"The city's not relinquishing control of (the streets). It's just more from one kind of political subdivision to another," city attorney Marco DeLucio said.

DeLucio said the city is simply using assets it has to finance the transaction for improvements to Ford Center, at one point calling it an "intrafamily transfer."

In this scenario, the city will sell six miles of streets to the Redevelopment Authority. The Redevelopment Authority will pay for those streets by putting bonds out for purchase. The Authority will then lease the streets to the Redevelopment Commission who will make payments for 10 years that will pay the bond payments.

According to DeLucio, the Redevelopment Authority will likely be placed privately with Old National Bank. Terms are currently being negotiated.

Bonds act similar to a loan in this situation, allowing the city to move forward with its project. The buyer of the bonds will then end up receiving their money back over the course of the 10 year payment schedule.

Does this impact the people living on the streets?

Kelley Coures, executive director of the Department of Metropolitan Development, said the financing plan changes nothing for the streets themselves − no changes to who maintains them, who uses them or anything else.

Coures said it's property that is owned by city government that can be used as a revenue generator.

"Whatever the street had before, the street has now," Coures said.

This is also not a lease-to-own situation. The Commission will relinquish the streets back to the city at the end of the 10-year lease.

Redevelopment Authority vs Redevelopment Commission

So who are these entities involved in the transaction?

The Redevelopment Commission is a city department within the Department of Metropolitan Development. Under the Commission exists the Redevelopment Authority, Ford Center and the Victory Theater.

The Commission is a six-member board appointed by the mayor and city council. Mayoral appointees are Karen Ragland, Ashley Hollen and Elexica McAlister. Council appointees are Heather Vaught and James Neisen. One seat is vacant.

The Authority is a three-member board, all appointed by the mayor. Current members are Nicholas Wildeman and Kenneth G. Haynie III. This board also has a vacancy.

Under city code, the Authority is tasked with financing, constructing and leasing public improvements to the Commission. It also has the authority to issue bonds to finance local improvement, as it will do in this situation.

More: Evansville will sell 6 miles of streets to help pay for updates to Ford Center

What will be updated at the Ford Center?

Scott Schoenike, executive director of the Ford Center, said when it comes to dealing with electronics, 12 years is a lifetime.

Arena officials reached a point where they can no longer get replacement parts for the score board or ribbon board. The lighting system still runs on Windows XP, Schoenike said.

"The reality is every five years the concession (point of sale system), for about a half-million dollars, has been replaced," he said. "This is our third system already."

Concession updates are also set to include new kiosks where attendees can make orders without standing in line for a cashier.

Schoenike said as a revenue generator, Ford Center has to be competitive, which means keeping equipment up to date.

But one candidate for mayor takes issue with the revenue generator portion of Ford Center.

Michael Daughtery, Libertarian candidate for mayor, spoke to City Council on Monday evening, raising issue with how much revenue the arena is actually generating.

From information compiled by the city and given to Daugherty, the arena revenue for 2021 was $286,659; 2022, $238,200 and six months into 2023, Ford Center had made only $17,736.

"The Ford Center is not bringing in enough revenue to cover just the scoreboard over its life expectancy," Daugherty said.

Councilor Zac Heronemus, D-First Ward, said Monday he didn't believe Daugherty's comments they took into account other aspects of economic impact brought about the arena: including hotel stays and restaurant visits by out-of-towners who attend events there.

Ford Center is an 11,000-seat arena, and those seats aren't filled by only people coming from Evansville, Heronemus said.

"Thousands of people from the Tri-State and even farther away come and enjoy the shows, enjoy sporting events, enjoy a multitude of things there," he said. "To look at numbers and frankly in my opinion, kind of misrepresent what the asset really does for our community, it does our community no service."

Not 'another Roberts Stadium'

Missy Mosby, D-Second Ward, said repair and maintenance has to start being included as a budget item, a refrain she's used when it comes to other city assets, such as parks, during multiple budget sessions.

"If we would have started doing that like we were talking about, we wouldn't have this big lump sum right in front of us," she said. "I'm very concerned, too, because we've got needs for our public safety (and) our parks we need repair and maintenance on."

Mosby said she's concerned about having another payment to make every year, like they've put something on a credit card.

DeLucio said he would disagree with the comparison to a credit card. He said this situation is more like taking out a second mortgage or home-equity loan for a repair item with ongoing maintenance.

"There's no question about it, it will be a set expense for 10 years that the city will have to deal with," he said.

Koehler Lindsey, who had questions on the process but voted in favor of the resolution, said she did not want the city to get stuck with another Roberts Stadium.

"We had so much difficulty and so many things we pushed to the side and said, 'Oh let's wait, let's not repair this, let's push to the side,'" she said. "We ended up tearing the whole thing down and starting over with this."

Koehler Lindsey said she would be OK with moving forward with this sort of financing as long as the council remained mindful to not use money solely out of the General Fund to pay for the bonds.

As it stands, the 2024 city capital improvement budget for Ford Center includes:

• Arena equipment lease payment - $580,800 out of casino revenue

• Audio system replacement - $350,000 - paid by bond

• Scoreboard and ribbon board - $3 million paid by bond

• Concession point-of-sale system - $400,000 - paid by bond

• Concession stand upgrades - $3.6 million - paid by bond

• Three new refrigerators - $15,000 out of casino revenue

• Battery backup - $35,000 from casino revenue

This article originally appeared on Evansville Courier & Press: 'Creative financing' making millions in Ford Center updates possible