Village Releases Q & A Statement on Proposed Lemont Sports Complex

The Village of Lemont released the following statement Friday in regard to the proposed $21 million indoor/outdoor sports facility that was unveiled by Mayor Brian Reaves at the Jan. 28 Village Board meeting. The village’s statement follows, in its entirety:

The following list of questions and answers regarding the announcement of the Lemont Sports Complex was created to address residents concerns and questions about the project. In addition, we will hold an informational meeting on Wednesday, February 6th, at 8:00 a.m. at the Lemont Police Department. The public hearing will be held on Monday, February 11th, at 7:00 p.m. at the Village Hall Board Room.

-Mayor Brian K. Reaves,Village of Lemont

Lemont Sports Complex (Will be officially named at a later date)

Q. What is it?

A. An indoor/outdoor all sports facility is proposed for a site at the north end of Stephen Street in Downtown Lemont  (Sanitary and Ship Canal).

• Total acreage – 26 acres
• Outdoor venue will consist of 190,000 sq. ft. with 2 fields a winter ice skating rink
• Indoor venue will consist of 122,000 sq. ft. with 4 fields and 450 person seating capacity
• Indoor facility will have optional court sport section to house 2 basketball courts or 5 volleyball courts or 1 tennis court
• Parking – 280 parking spots

Q. How will the debt service on the bonds be paid?

A. The revenues from the facility will pay for the debt service on the bonds. Revenues will be generated from the facility include revenues from groups renting the facility, concessions, and other miscellaneous operating revenues.

Q. How are these bonds different than bonds sold for other projects/purposes in Lemont that have required a referendum?

A. This project is being financed with alternate revenue source bonds. As a result, this will not be on your tax bill. This means that the Village will use revenues from the project to pay the debt service on the bonds. Other bond issues, done for other taxing bodies, are pure general obligation bonds, hence, the debt service is paid via property taxes on the residents’ property tax bill.

Q. Will the revenues from the complex alone be enough to pay operational expenditures and the debtservices? What happens if the revenues from the facility fall short of the amount needed to pay the debt services?

A. With an alternative revenue source bond, the Village is also required to pledge “other sources” of revenue to pay the debt service, should the revenues from the complex be insufficient to pay the debt service. In the case of the complex, the Village is pledging the operational revenue from the complex, sales tax receipts, income tax and TIF increment. Although these revenues are being pledged, the financial model for the complex is focused solely on the anticipated revenue from the facility. Based on anticipated revenue and operational expenditures, the Village expects to earn enough revenue from the facility to show 133% debt coverage. This means that projections show about $300,000 to $400,000 more revenue from the facility than is needed to cover the debt payment. The Village is required by law to have third party studies show this level of “coverage” in order to sell the bonds. This “extra coverage” also allows for the debt service to be paid with the facilities revenues even if the facility underperforms. The additional pledged revenue sources would create a second tier fallback to ensure sufficient funds are available should the facility underperform.

Q. Why wasn’t the public informed?

A. Like any business venture, due diligence has to be done first to determine the feasibility of a project of this size. The Village’s staff has worked with consultants over the years regarding this type of use. A recreational facility located somewhere within the Village has been discussed and mentioned publicly throughout the years. Furthermore, this is also reflected in the Village’s Comprehensive Plan, which was adopted after public hearings were held. The Village, at the Mayoral and staff level, has continued to look for all economic development options, as part of the due diligence and background before the   Village Board has discussed this matter. The Village completed the feasibility studies at the end of November. Discussion about a similar project started a year ago with a private entity that proposed a sports facility, similar to this project on a different site. The site was not feasible and staff pursued alternative sites. At publicly held strategic planning meetings, the proposed new location and preliminary feasibility studies were discussed with the Village Board. In December, as plans began to take shape, more discussion took place during a Committee of the Whole meeting. At no time was this matter discussed in violation of any law. As discussed below, the action taken on January 28, 2013 was the first such vote ever taken on this matter.

Q. Is the public able to reject the project?

A. If there is enough support against the project, yes. The process to reject the project has been included on the preliminary notice and listed in the legal notification section of the February 1, 2013 issue of the Lemont Reporter.

Q. What happened at the meeting on January 28th? Will there be a vote taken on the proposed project at the next Board Meeting on February 11th?

A. During the January 28th Village Board Meeting, the Village Board announced specifics on the project and began the process for issuing the bonds. As with any alternative revenue bond issuance, there is an approximately 3 month statutorily required timeframe where various actions must be taken. The vote from the Village Board was to begin the financing process and the financing process only. The meeting on February 11th is a public hearing to solicit public comment on the project and address any questions or concerns residents may have. There will not be a vote at this meeting, and all future votes will be taken after public opinion has been provided to the Village Board. The Village has not taken any action or discussed the other aspects needed to complete this project. Those discussions will be held at Village Board meetings which will be available for the public to comment and address this development directly with the Village Board.

Q. Who will run this complex?

A. The Village of Lemont will control and operate this complex, with the assistance of a management firm that specializes in this area. It is intended that the Village will run the facility on its own or in conjunction with the Lemont Park District in the near future.

Q. What is the Economic Driver?

A. Our community has a low roof count to attract various commercial businesses. Development of a destination facility, such as this project, will assist in providing the needed population to bring new businesses to town and assist in the sustainment of current businesses in our community. Studies have estimated that the project will conservatively bring between 500,000 and 600,000 people annually to the facility. The economic impact is anticipated to include additional sales tax revenue of $100,000 - $200,000 due to additional spending, which translates into $10-20 million of additional spending. One comment received when looking at this project and impact to the local commercial sector stated the following: “The Sports Complex will present the Village with a “game changing” opportunity with which to leverage other development projects on the table. The demand created by this project cannot be absorbed by the existing supply of hospitality, retail and family entertainment uses in the Village.”

Q. Why was the term “Fast Track” used by the Mayor?

A. The comment was used in regards to the construction process. The project will be on a fast track in order to be built by this fall in order to pick up the revenue stream generated by leagues that need indoor space for practice, games and tournaments. The Village has already been contacted by leagues/teams for the upcoming indoor season since the announcement. By ensuring the project is completed by fall, these groups can enter into contracts with the Village to use the complex this season, as the window has opened to sign teams up. In order to complete the project by the fall and accommodate these groups, the project must begin this spring.

Q. Can these funds be used for something else?

A. No, they cannot. In order to sell bonds for any project or purpose, there must be a source of revenue that ensures those providing the financing are paid back. In the case of these bonds, the revenue source is the revenue produced by the use of the facility. Without this revenue stream, there is not adequate financing available to issue any other debt.

Q. Will this compete with the Park District?

A. The goal and vision of these facilities are not to compete, but to be complimentary uses. The Park District’s primary goal will be to continue to provide premier programs and recreational opportunities for the community. The goal of the complex is to develop a facility for a regional draw for traveling team practices and competitions. The Village has already been contacted by numerous organizations seeking opportunities to rent.

Q. How is the Village paying for the land?

A. The Village is in the process of negotiating a long term lease with the property owner, the Metropolitan Water Reclamation District of Greater Chicago (MWRD). The Village has been working with MWRD for numerous years on this property to clean up of the old tanks and conduct a Brownfield study (environmental assessment through a state grant) to finalize a remediation plan to allow for redevelopment of the site. The Village’s annual payment to MWRD for the land is correlated with the success of the complex to ensure that it would not be a significant financial liability in the operation of the facility. MWRD authorized the negotiations of this land at a public meeting toward the end of 2012.

Q. How does this work for the Village and not a private firm?

A. This project originally came to the Village as a private idea. As the work commenced and feasibility proceeded, it became apparent that between land cost and Cook County taxes, it would not make this a financially viable solution. The Village is in the process of negotiating favorable terms with MWRD to lease the land for a significant period of time at little or no cost to the Village. Furthermore, unlike private firms, the Village is able to seek tax exemptions for its buildings and property that are used for a public purpose. Additionally, insurance for the facility is substantially lower for Village buildings that are used for a public purpose as opposed to private, for profit, facilities. Furthermore, the Village is able to mitigate additional costs, such as maintenance, accounting and administration of the facility. The Village has a positive track record of “doing more with less” and will continue to do so in operating this facility.

Q. Who will provide the insurance for the facility?

A. The Village is a member of the Intergovernmental Risk Management Agency (IRMA), which is a pooled group of government entities to provide needed coverage to the members of the group. IRMA will provide building construction, property and liability insurance for the facility at a significantly lower cost than a private company could obtain. This pool is authorized by state statue, and the Village has been a member for over 20 years.

Q. Who will construct the facility?

A. As required by law, this will be a Public Works project similar to any Village road, utility or public building project. As such, there will be a sealed bid process and will require prevailing wage be used. If this project proceeds forward, notices will be provided in several professional construction publications, websites and newspapers. Any and all contractors will be allowed to bid on this project. The Village will use a professional service contractor for design, engineering and construction management.

Q. What is the financial state of the Village?

A. The Village has continued to improve its financial position every year to include improving its fund balances. Please visit the Village Financial Profile page of the Village website, http://www.lemont.il.us/financialprofile.

Q. How will this project affect traffic in the downtown area? How will parking be handled for the larger events?

A. The primary impact will likely be to Illinois and Stephen Street during peak times. It may be necessary for traffic safety officers or emergency management personnel to be involved to direct traffic, similar to how other special events are handled in the Village. In regards to parking, there is ample parking planned as part of the project for the majority of activities to take place at the complex. In times of larger tournaments, shows and other events, the Metra lots and parking garage are available during these peak use times (nights/weekends) where patrons can be shuttled to and from the facility.

Q. The proposed site was previously used as a marine chemical terminal. Is the site deemed safe after housing of these chemical terminals?

A. For over a decade, the Village has worked with MWRD to conduct an environmental assessment with a Brownfield Grant from the IEPA to test, evaluate and study the proper way to remediate the site.

Q. Why not phase this project in?

A. The project will be somewhat phased in with the indoor facility being constructed for occupancy in the fall of 2013 and outdoor fields ready for spring of 2014. To maximize bidding efficiencies, some work such as utilities and site work will be completed together. There are potential plans and ample property on the site for additional outdoor fields in the future, but this will be phased in if the demand shows the need in the future and funds allow for the expansion.

Q. How is this project different than the facilities in the nearby area?

A. Experts have noted that this facility is differentiated from its competitors in that it will have enough space for 4 regulation size indoor fields that can accommodate soccer, lacrosse, rugby and other sporting events. The 122,000 square foot facility, with no beams breaking up the space, will allow for the flexibility to accommodate multiple events/sports at one time and maximize the use of the facility. The vast indoor space also will allow for large scale trade shows and other events to be held. Another major difference is that no other facility in the area has the combination of indoor and outdoor facilities. As a result of this feature, leagues/groups can move indoor or outdoor depending on the season for year-long recreation.

Q. What are the next steps for the project?

A. There will be a public hearing held on February 11th at 7:00 p.m. at the Village Hall Board Room. No vote will be taken. Additional public forums will be available to include a coffee with the Mayor on February 6th at 8 a.m. There will not be any further action taken until March.