Officials extend arena deadline

McKelvey said the city and developer have a 'significant gap' financially.
& lt;a href=mailto:rgsmith@vindy.com & gt;By ROGER SMITH & lt;/a & gt;
CITY HALL REPORTER
YOUNGSTOWN -- A second deadline to reach a downtown civic center contract has come and gone.
How much longer such a deal takes -- a few more days, a few more weeks -- depends squarely on money, said Mayor George M. McKelvey.
That's if a deal is reachable at all, he added.
The city and the chosen developer, FaulknerUSA, agreed Friday afternoon to extend their deadline indefinitely. Either side has the right to end talks immediately.
The mayor said both sides are working aggressively toward a deal.
"They are seriously and honestly working toward a number they feel they can raise to complete this project," he said.
An agreement, however, could be days or even weeks away, McKelvey said.
The sticking point is how much money FaulknerUSA can raise to build the proposed 5,500- to 6,500-seat arena. That money would be in addition to the city's $26.8 million federal grant, McKelvey said.
Figures are confidential
He wouldn't reveal actual figures, citing confidentiality. But McKelvey did acknowledge there is a "significant gap" between the city's grant and how much more money the arena will cost.
The mayor used a hypothetical example to make the point: FaulknerUSA has proposed a roughly $50 million project. That leaves the developer to borrow $23.2 million after factoring in the city's grant.
Financiers need to see an arena generate enough cash flow so they know they will be repaid, he said. Lenders won't part with their money until they do, he said.
The city won't give any more money for the arena, McKelvey said.
Unique situation
The trouble with this project -- unlike most other public arenas -- is having no tax behind it to guarantee the debt is repaid, he said.
For example, the Gateway project in Cleveland has a so-called "sin tax," which is levied on cigarette and alcohol sales for Cuyahoga County residents. That guarantees the debt will be paid off on Gund Arena and Jacobs Field.
"This is much, much more difficult to do," McKelvey said.
Talks will continue as long as there is progress and the city will be reasonable about a time line, he said.
A 2005 deadline looms to use the federal money and have the project done, however. So, the city could start talking with another developer if a deal isn't reached within a few weeks, McKelvey said.
The city also could turn to other alternatives for using the money if finances show that an arena won't work, such as a community center, the mayor added.