Question
Create a public financing plan for new City Stadium. Projected costs is $72million. In this plan the private loans group (ECL) group will pay 25%
Create a public financing plan for new City Stadium. Projected costs is $72million. In this plan the private loans group (ECL) group will pay 25% of costs (18.75 million) and will be financed through a private loan at 8% interest. The county will pay 25% (18.75 million) and City will be responsible for the remaining 50% (37.5 million). However, City and the County need to determine which sources should be used to finance their portion. Establish a public financing plan that covers the public portion of debt and utilizes funds from at least 3 sources.
Determine the total amount that must be financed
Determine which sources will be used and what changes to those sources must be made
Determine the amount of financing that will be generated from each source.
Determine the timing: when will money collected from each source and when will it be paid back.
Create a table showing the sources of financing, the total amount financed from each source, the annual payment amounts, and the time period of those payments.
| You could use General Obligation Bonds typically carry a 3.75% rate, backed by: | You could use Revenue Bonds typically carry a 6% rate, backed by: |
| City / County Property Tax | Ticket tax/ surcharge |
| Special District Taxes | Parking tax/ surcharge |
| Hotel Taxes | Sin Tax |
| Sin Tax | Sales Tax |
| *GOB Require a public vote for use | Lease Revenue (Flat lease fee payment, % of naming rights, suites etc. ). |
Current Tax Rates and $ Generated
| Tax | Current Rate | Annual Income |
| County Property Tax | 1.00% | $475,000,000 |
| City Property Tax | 1.00% | $205,000,000 |
| Special District Sales Tax | 8.75% | $133,000,000 |
| Hotel Tax | 12%
| $3,300,000 |
| Sin Tax | 12%
| $80,650,000 |
*Assume all income currently generated by each of these taxes is already allocated in the budget.
Stadium Financing Table
| Group | Amount to be Financed | Funding Sources | Interest Rate | Annual Payment | Time to pay off | Total Cost | Other considerations |
| ECL | $18.75 million | Private loan | 8% | $2,794,303 | 10 years | $27,943,029 | Cost of capital is high |
| Capitol County | $18.75 million |
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| Capitol City | $37.5 million |
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County Plan
| Source Backing | Old Tax Rate | Old Income | New Rate | Annual Amount toward debt |
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City Plan
| Source Backing | Old Tax Rate | Old Income | New Rate | Annual Amount toward debt |
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