Potential SportsPlex Acquisition - Frequently Asked Questions

[See the Bloomington SportsPlex Financial Fact Sheet for additional financial information.|file:Bloomington_Sportsplex_FINANCIAL_FACT_SHEET.pdf]

• [What is a revenue bond and are there any taxpayer implications?|#bond]
• [Why has the City chosen to pursue a revenue bond to purchase the SportsPlex?|#revenue]
• [What happens if there are no buyers for the bond?|#buyers]
• [What protections do the taxpayers have in the event that the SportsPlex does not generate the amount of revenue that is projected?|#finished]
• [How many members does the Sportsplex currently have? What is the usage?|#members]
• [What will happen to existing memberships at the SportsPlex?|#existing]
• [Is the SportsPlex in danger of closing? Why not allow the current owners/business to default and then purchase it directly from the bank?|#closing]
• [What additional land will be added to the City's inventory through this purchase?|#land]
• [Is the potential for additional traffic congestion along that section of 2nd street a concern for the City?|#traffic]
• [Is there a parking concern at the SportsPlex?|#parking]
• [Is the City concerned about the perception of competition against the YMCA or other fitness facilities?|#perception]
• [Why are people only finding about this now?|#now]

[anchor:bond]What is a revenue bond and are there any taxpayer implications?

A revenue bond is a public funding mechanism that relies on revenue generated by a facility or entity in an amount that will cover debt service/loan and operating expenses. It is typically backed by property taxes as a way to ensure potential bond investors that they will recover their investment in the event revenues do not materialize as expected.

The other public funding mechanism more commonly used for a municipal project is called a general obligation bond which uses property taxes as a funding source.

[anchor:revenue]Why has the City chosen to pursue a revenue bond to purchase the SportsPlex?

City staff is recommending use of a revenue bond for two reasons:

1. To avoid using the tax based general obligation bond which would have an impact on taxpayers.

2. Existing programs at the SportsPlex, as well as the potential for new activities offered by the Parks and Recreation Department, are projected to bring in enough revenue to offset debt service/loan and operating expenses.

A financial feasibility study was conducted by Crowe-Horwath, a financial consulting firm. The revenue estimates in that study were conservative. Revenue projections in the study assume 27% less income than revenues collected at the SportsPlex in 2008. Expenses were estimated higher than current expenses at the SportsPlex. City staff feels confident that sufficient revenue will be generated in order to cover expenses including debt service.

The City has previous experience with revenue bonds as a type of financing. A revenue bond was used to construct the new nine holes at Cascades Golf Course in 1999. The City has successfully paid all debt service and expenses associated with that revenue bond for the past 10 years.

[anchor:buyers]What happens if there are no buyers for the bond?

Then the bond is simply re-bid. The City's financial consultants, Crowe-Horwath, have indicated that municipal bonds, in particular, have traditionally been extremely stable and that the current economic climate makes them an even more attractive option for potential investors.

Additionally, the City has an AA bond rating, which also makes it an extremely attractive and stable investment option for potential buyers. The bonds are to be paid off in 20 years.

[anchor:protections]What protections do the taxpayers have in the event that the SportsPlex does not generate the amount of revenue that is projected?

A reserve fund has been built into the $6.5 million proceeds from the bond sale. This will allow the City to pay the debt service for two full years assuming that revenue does not come in as projected. So there is essentially a two-year buffer for the City. During this period, whatever revenue is generated will be used as additional reserves for future years.

[anchor:members]How many members does the Sportsplex currently have? What is the usage?

There are currently 2,700 fitness members who pay to utilize the fitness area in the SportsPlex. Youth and adult basketball leagues have over 2,100 participants; soccer leagues have over 1,800 participants; flag football has 255 participants. The facility is also used for various special events and camps. Attendees at those activities amount to more than 6,820 participations. In total, there are between 450,000 - 500,000 visits to this facility annually.

In addition, the SportsPlex currently facilitates a number of programs and activities ranging from fitness memberships, youth and adult basketball and volleyball leagues; soccer/flag football leagues, lessons, camps and amateur basketball and wrestling tournaments and other events that generate significant economic impact for many businesses in the community.

[anchor:existing]What will happen to existing memberships at the SportsPlex?

All existing memberships will be honored for the duration of their current term. Members will be encouraged to renew their membership through the City when their previous membership expires.

[anchor:closing]Is the SportsPlex in danger of closing? Why not allow the current owners/business to default and then purchase it directly from the bank?

Any suggestion that the SportsPlex is failing would be a complete assumption. In fact, we don't know the what the owners' motives are for selling.

If one makes an assumption that the facility might go into foreclosure, buying from the bank following a foreclosure would present several challenges. For one, the City becomes one of any number of bidders for the property, which could result in having to pay a higher purchase price or could result in the City not being the successful bidder.

Additionally, the SportsPlex currently has many programs/memberships that generate significant income. If the SportsPlex is closed for a period of time those revenue generating activities would have to be re-built from scratch.

Finally, there are a number of people in the community that currently use the facility. Those users would have to find another place to go if the business were to close.

[anchor:land]What additional land will be added to the City's inventory through this purchase?

The purchase of the SportsPlex will add 10 additional acres to the City's inventory. The total number of acres in the City's inventory will be 2,272 with this purchase. In the Twin Lakes area the City currently owns 62 acres. This purchase will connect the City owned acreage to the SportsPlex property.

[anchor:traffic]Is the potential for additional traffic congestion along that section of 2nd street a concern for the City?

We wouldn't expect traffic to the facility to change much from what is currently taking place. We do acknowledge that exiting the facility and heading back towards downtown Bloomington can be challenging during peak traffic hours. The City of Bloomington Public Works Department is in the process of conducting the necessary traffic counts at the SportsPlex. Once the City has completed this study, we will have a better idea of the volume of traffic and subsequent steps that we can take to alleviate it.

[anchor:parking]Is there a parking concern at the SportsPlex?

There is ample parking at the facility for most activities. With this purchase, the City will own both this property as well as Twin Lakes, which has an additional 305 parking spaces that are adjacent to the SportsPlex.

[anchor:perception]Is the City concerned about the perception of competition against the YMCA or other fitness facilities?

The YMCA has expressed support for the City's purchase of the SportsPlex. The City already has an existing partnership with the YMCA. Neither entity views this as direct competition, but rather an opportunity to explore new partnership opportunities and provide health/fitness services to a broader segment of our population. Each facility provides a different set of amenities to their clients. The SportsPlex has five basketball/volleyball courts an indoor soccer field, an elevated 1/5 mile track, a dance/aerobic exercise room and fitness equipment. The YMCA, by contrast, has 2 indoor pools, numerous fitness areas, 3 basketball courts and services a different segment of the population. This is an opportunity for the City to promote much-needed wellness and fitness in a first-class facility on the west side of Bloomington at a price that will make sense for many families.

[anchor:now]Why are people only finding about this now?

People are finding out about this now because the City first has to declare its intent to issue revenue bonds for the potential purchase of the SportsPlex. This was done, as required by law, at a February 24 Park Board meeting.

The next steps in the process allow for public participation at upcoming Park Board and City Council meetings Listed below is a schedule of the meetings at which public comment will be welcomed:

All meetings will be held in City Hall in the Council Chambers

March 11th - Parks Board meeting - 4pm

March23rd - Parks Board meeting - 4pm

March 25th - City Council meeting - 7:30pm

April 1st - City Council meeting - 7:30pm

We would be happy to answer any questions you have by phone, email or at any of the above mentioned public meetings.

Call 812 349-3700 or email [parks@bloomington.in.gov|mailto:parks@bloomington.in.gov] for more information.