By C.J. LOVELACE
4:00 AM EST, November 4, 2012
Questions about Hagerstown’s proposed downtown multiuse sports and events center (MUSEC) have gone unanswered publicly for months, in particular those related to cost estimates for construction, property acquisition and management of the new facility.
City officials said some questions cannot be answered yet because much of the information must remain confidential until $15 million from a private donor is confirmed in writing and lease negotiations with the Hagerstown Suns are finalized.
What is known is that the as-yet-unconfirmed $15 million donation — the single largest private donation in city history — has increased the MUSEC’s cost estimate from $30 million to $37 million in an attempt to get the biggest bang for the buck in terms of additional downtown redevelopment opportunities, city officials said.
The Herald-Mail contacted city officials this week, seeking answers to several questions about the project.
A group of city staff members, including Administrator Bruce Zimmerman, MUSEC Project Manager Jill Estavillo, Finance Director Michelle Burker, Engineer Rodney Tissue and Communications Manager Erin Wolfe, provided answers in an email Wednesday night.
City officials have said since March that the chosen site — near the corner of West Baltimore Street and Summit Avenue — was selected because it offers the most opportunity for new investment and revitalization of the city’s struggling downtown, an opportunity that goes beyond a new stadium to keep the Hagerstown Suns baseball team here.
If confirmed, the $15 million donation would allow the city to purchase and raze blighted buildings along West Antietam Street to make way for a community park and plaza entryway for the stadium, along with other streetscape improvements.
The three properties to be purchased and demolished are at 25, 29 and 31-33 W. Antietam St. The Antietam Paper Co. building at 37 W. Antietam St. also would be purchased, then renovated into a Suns team store and possibly other related attractions such as an arcade for youngsters, city officials said.
“We’re hopeful of being able to complete the plaza to provide an attractive entrance to the MUSEC, an actively programmed public space and a significant improvement over the deteriorated condition of several properties,” city officials said in their emailed response.
The total estimated cost of the stadium and entrance plaza is $28.85 million, with the remaining $8.15 million to pay for the adjacent parking deck, according to the city’s preliminary project budget and funding plan.
The construction cost of the stadium alone is estimated at about $22 million, leaving approximately $6.85 million for property acquisition and “soft costs,” such as architectural, engineering and other pre-construction costs.
Properties that would need to be purchased for the stadium itself include the Baltimore Street Station car wash at 32 W. Baltimore St.; Washington County annex building at 80 W. Baltimore St.; D&P Coin-Op laundry at 140 Summit Ave.; and a large section of The Herald-Mail’s parking lot at 100 Summit Ave.
According to preliminary estimates, property acquisition costs for the MUSEC are estimated at between $5.5 million and $6.5 million, city officials said, although they declined to provide exact figures for each property.
“Publicly stating estimated acquisition costs for the individual properties could undermine the acquisition process,” city officials said, noting that the assessed value, as determined by the state, is $5.3 million for all of the properties needed for the facility, excluding the parking deck.
According to the Maryland Department of Assessment and Taxation, the assessed values of the properties are as follows — county annex building, $1,376,600; car wash, $1,236,800; laundromat, $236,400; 37 W. Antietam St. (Antietam Paper Co.), $469,500; 31-33 W. Antietam St., $148,500; 25 W. Antietam St., $146,000; and 29 W. Antietam St., $73,400.
The Herald-Mail owns about 4.75 acres of land, valued at $1.24 million in 2011, according to state assessments, but city officials did not specify the exact acreage that would need to be purchased. The Herald-Mail’s building would not be part of the potential sale.
The city has contacted the owners of the needed properties, and acquisition prices are being negotiated with some property owners, city officials said.
Herald-Mail Media President Andy Bruns said the city has contacted the company, but he could not discuss potential prices of the parking lot due to the city’s confidentiality conditions.
Although they wouldn’t discuss potential purchase prices for individual properties, city officials said property appraisals, assessed values and related property information would go into the process.
City officials estimate that demolition of the needed properties would cost about $275,000, but that’s only staff estimate and work has not been put out for bid to contractors.
Any property purchase or demolition contract would need to be voted on and approved in public session by the mayor and Hagerstown City Council before the project could move forward.
City officials anticipate the facility would generate a net increase in property tax revenue from redevelopment and reinvestment around the site, which could equate to more than $4 million over 10 years within a quarter-mile radius, according to the most conservative projection in Ripken Design’s feasibility study presented in April.
Ripken Design is a Baltimore-based firm that designs, manages, consults and conducts feasibility studies for stadium facilities. Along with Hagerstown, Ripken recently produced studies for Norman, Okla., Crown Point, Ind., and Placer Valley, Calif., according to the company’s website.
The parking lot behind Columbia Bank on West Antietam Street, between the District Court and Dagmar buildings, would need to be acquired so that a parking deck could be built on that site. The acquisition cost, along with design and construction, would be included in the $8.15 million allocated for the deck, city officials said.
“This is a preliminary cost estimate, which is based on industry standards, not a specific design,” city officials said in the email.
Preliminary plans call for the deck to have about 400 spaces and be three or four floors tall, with about 127 parking spaces per floor.
In comparison, the North Potomac Street deck built in 1986 has 440 spaces on five floors. The costs of the North Potomac Street deck “were not readily available,” city officials said.
The Arts and Entertainment deck behind Bulls & Bears restaurant was built in 2005 at a cost of $3.2 million. It has 185 spaces and 4.5 floors.
Environmental studies of the MUSEC site are ongoing, city officials said. Phase 1 is complete and Phase 2 is taking place now to determine if the ground is safe for construction and if any other hazards exist.
Soil testing has been conducted over the past few months, but results were not available last week. Tissue said Thursday that a full report is expected to be completed by early December.
The Phase 1 study was completed by ECS Mid-Atlantic LLC for $3,775, and Phase 2 was awarded to Triad Engineering on Aug. 24 at a cost of $8,345. These costs are part of the preconstruction “soft costs.”
A preliminary funding formula was established by the city earlier this year, but its feasibility relies heavily on the $15 million donation and another $10 million in state money through the Maryland Stadium Authority.
Without that $25 million in grant funding, the proposed project and preliminary funding plan would not have received the support from city council members that it has to date, they have said.
The city anticipates receiving an additional $1 million in private-sector funding for the project, in addition to a confirmed contribution of $360,000 over six years from the Hagerstown-Washington County Convention and Visitors Bureau to be used in yearly operations.
That leaves $11 million that the city would need to finance through municipal bond proceeds.
Earlier this year, city and Washington County officials agreed on a funding formula that would support the local debt share, providing up to $800,000 annually over 20 years for the potential of $16 million.
To accomplish this, the Washington County Board of Commissioners decided it would take over the city’s $400,000-a-year payment to the county 911 Center, freeing up those funds to be used for a downtown redevelopment project. The city council agreed to put up $400,000 per year to match.
If the city makes an on-time annual payment of $800,000, calculations show an $11 million bond financed at a constant 3.2-percent interest rate could be repaid within 20 years, according to the city’s preliminary funding plan.
According to Herald-Mail calculations, the total 20-year accrued interest paid on an $11 million bond with a constant 3.2-percent interest rate would be about $3.73 million if the city were to make on-time annual payments of $800,000 and no other variables came into play.
City council members have said that they would not support raising the tax rate to help pay off the debt service on the project.
While details of the day-to-day operations of the proposed MUSEC will remain largely unknown until a new lease with the Suns is signed, the city has made some preliminary estimates of annual revenues and expenditures generated by the facility.
The largest contribution to operating revenues would come from the Suns’ lease payment as the primary tenant of the MUSEC.
“The business terms of the lease project the Hagerstown Suns will pay $300,000 for 20 years,” city officials said. “Including a proposed inflation cause, this amounts to $6.2 million over 20 years.”
The city estimates revenues of $250,000 on the parking deck each year and another $120,000 per year in admissions and amusement tax surcharges on sales at the facility.
Add in the six-year annual contribution of $60,000 from the Convention and Visitors Bureau, and that works out to about $730,000 coming into city coffers each year.
City officials anticipate about $335,000 in operating expenditures over the course of a year, including $200,000 for running the parking deck and $85,000 for stadium operations, specifically to be used for security and traffic control around the facility.
An additional $50,000 each year would be set aside in a Capital Reserve fund to pay for future upgrades as the MUSEC ages, city officials said.
In total, projections show it would equate to an annual net operating profit of $395,000.
“These operating revenues in turn will fund the city’s operating expenses as shown in the plan and also contribute toward funding of project construction contingencies and downtown redevelopment initiatives,” city officials said.
In a follow-up email, Estavillo wrote that project contingencies include any unexpected costs during the design, construction and startup operations of the facility, “which may include cost overruns, unexpected environmental remediation requirements, additional costs of asbestos removal during demolition if found, and unexpected/required equipment expenses.”
“Types of projects could include streetscape, infrastructure and utility work adjacent to other building redevelopment projects and/or new office, entertainment, retail and housing development projects,” according to Estavillo.
Lease negotiations are ongoing, but city officials said they expect the Suns would be responsible for all facility and field maintenance expenses, “including but not limited to cleaning, general repairs and replacement of concessions or other equipment.”
The Suns would pay for utilities, but the city would be responsible for maintaining the field lights, city officials said.
Currently, the city pays $274,037 per year for maintenance and utilities at Municipal Stadium, according to the Ripken Design report. The Suns pay $1 in annual rent to play at the 82-year-old ballpark on East Memorial Boulevard.
With the lease still pending, Estavillo said there are a “series of contingency clauses,” which are common for minor league baseball leases, that could act as a safety net for the city should the city council decide it wants to stop the project even if the Suns agree to terms.
Estavillo said a lease would need to be in place before making any decisions that would move the proposed project forward into an “actual project.” The confirmation of the $15 million donation also must happen, she said.
To be or not to be?
The remainder of 2012, especially with city elections on tap for Tuesday, could turn out to be pivotal in terms of where the project is, or is not, going.
Eleven candidates are vying for the five open seats on the Hagerstown City Council.
Additionally, Republican incumbent Mayor Robert E. Bruchey II, a vocal proponent of the project, faces Democratic challenger David Gysberts in a rematch of 2009’s election.
Regardless of who wins council seats on Tuesday, three votes would be needed to keep the MUSEC moving forward. Likewise, three votes against the project could potentially have the power to stop it.
The mayor does not have a vote in city decisions, but does have the power to veto in the event of a 3-2 vote. A 4-1 vote, however, the mayor could not stop.
“It definitely could stop completely in its tracks,” Bruchey said Thursday. “I could say that I certainly hope that wouldn’t be the case with whoever is elected. I certainly hope that with the amount of time, effort, dedication that staff has put in to doing their due diligence on this project, that (the city council) at least let staff finish that process and make a determination whether or not this project can move forward.”
Bruchey, who maintains that the MUSEC as proposed would be a step toward revitalizing the city’s core, said it would be a “slap in the face to the citizens of Hagerstown” if the new administration chose to “arbitrarily” stop this unprecedented project in its tracks without first considering all of the information available.
For Gysberts, who, if elected, said he intends to keep an open mind about the issue to make the “best data-driven decision,” it all comes down to the location.
“There’s so many variables and different questions that are still up in the air that, again, I think it’s hard to say yes or no,” he said. “In terms of an actual plan, there isn’t an actual plan yet. We’ve seen artist renditions and all this other stuff, but the main question still remains: Is that the best location?”
Gysberts said he sees the value in keeping the Suns here, but the city has done a “terrible job of demonstrating why the downtown location is the best.”
The city hasn’t shown how the project would benefit the public, he said.
“Certainly, there is the possibility that it could create economic development around it, but it’s almost like, ‘Well, let’s build it and cross our fingers,’” Gysberts said. “I think there’s a lot of rightful skepticism to the numbers that they use.”
The idea of building a new stadium has been discussed by city officials for years and this is the closest the city has gotten to putting together all of the information and making an educated decision on a project that “can propel us for the next 50 years,” Bruchey said.
At some point, the city needs to take action in order to reinvest in itself and move forward, he said.
“We can do nothing, and let this cancer that we’ve been fighting off for 20 years in our core spread in a domino effect,” Bruchey said. “... We can’t continue to plan and plan and plan and plan, and never take action.”
Preliminary Project Budget
Construction expenditures: $37,000,000
• Stadium facility/entrance plaza - $28,850,000
- Construction estimate - $22,000,000
- Property acquisition/other costs - $6,850,000
• Parking deck - $8,150,000
Funding sources: $37,000,000
• Private donation - $15,000,000 ($10M naming rights, $5M other downtown redevelopment)
• City bond financing - $11,000,000 (paid for through city, county contribution, plus net operating income)
• State grant - $10,000,000
• Other private donations - $1,000,000
Annual Operating Revenue/Expenditures
Projected operating revenue: $730,000
• Hagerstown Suns lease payment - $300,000
• Convention & Visitors Bureau contribution - $60,000 (for 6 years)
• Parking Deck - $250,000
• Admissions & Amusement Tax - $120,000
Projected operating expenditures/capital reserve: $335,000
• Stadium - $85,000
• Parking Deck - $200,000
• Capital Reserve - $50,000
Annual Debt Service
Revenues applied to debt service: $800,000
• City - $400,000
• County - $400,000
Debt service expenditures: $800,000
• MUSEC debt service payments - $800,000 ($11M at 3.2% over 20 years)
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