Greensboro, NC -- After 18 months of planning, discussing, and securing finances, the Greensboro City Council gave the green light to the Greensboro Performing Arts Center.
The project is estimated to cost $60 million dollars. $20 million dollars has been committed by private donors, and the city will pay $30 million. There is currently a $10 million dollar gap in funding.
The $60 million price-tag is just the principal. The city does not have the cash on hand to cut a $30 million check for GPAC.
They will use a "certificate of participation" or a loan, to fund the project. The city is estimating it will pay an additional $21 million in interest, and they plan on financing that over a 28-year-period.
The city will pay down the loan with money from premium parking fees, hotel-motel tax, and ticket and user fees.
"Knowing that the way we're going to fund that debt, to pay for the principal, pay for the interest is solely on user fees, hotel-motel tax and parking fees," explained Councilman Zack Matheny, Greensboro City Council, District 3.
The GPAC will be built on a plot of land bordered by Lindsay Street, Summit Avenue and Elm Street in downtown Greensboro. The property will be purchased for $7.6 million. Construction is expected to cost $50 million.
"We really want to focus on the people using the performance arts center to pay for the performing arts center," explained Matheny.
$17 million will come from hotel-motel tax. $10 million will be spent on the principal, and $7 million will be spent on interest.
In an emailed response from a city spokesman, "The portion slated for GPAC is only a portion of Guilford County's 3% occupancy tax. The City also has a 3% occupancy tax, which we are using for debt service on Coliseum improvements."
The $17 million will also be financed over 28 years, but the city expects capital funds to be available from the occupancy tax in about 15 years.
"If the growth in this revenue source exceeds our projection, then there could be more funds available and/or sooner than in 15 years. We also expect that there could be small amounts available for other things ($100,000 to $200,000 range) periodically during the term of the GPAC bond, such as what was paid for the Bryan Park Soccer Complex. It all depends on how closely actual revenues track against our current projections," explained a city spokesman in an emailed response.
Councilman Matheny says the city has not yet secured a line of credit. The city is basing their interest projections on an estimated 4.5% rate. They will sell the $30 million long-term bond in next couple of years.
"We listened to the city of Greensboro, the citizens of Greensboro. And I think you made an important question, it's not property tax dollars, and that is something that was very important for us not to do. We wanted to design something like Durham that did not use property tax dollars, that used the people that are using it, their dollars," explained Matheny.
"And to me, we got the biggest bang for our buck by really questioning that financial plan to make sure it wasn't on the back of the property taxes."
As for $10 million gap in funding, Councilman Matheny says, "I will tell you the city does not really have a back-up plan because I feel very confident that it's going to come from private donations."
The city estimates they will have enough money from the ticket tax, parking fees, and hotel-motel tax to cover the principal and the interest. However, some council members aren't convinced.
Council member Marikay Abuzuaiter voted against GPAC. She told WFMY News 2, "I was a performing arts major. I would love to see one, but right now, to me, it is not the time in this economy..."I really hope it succeeds. But, should it not succeed or meet expectations, then the shortfall will come out of our general fund and fall on the taxpayer's back. That is my biggest concern."
The council voted 6-3 in favor of the performing arts center. Council members Tony Wilkins, Marikay Abuzuaiter, and Dianne Bellamy-Small voted against it.
READ: Greensboro City Council Approves Financing and Location for GPAC
WFMY News 2