Treasurer will buy county note to provide the funds for start-up
5/8/2007The first money Lucas County spends on the new multipurpose arena in downtown Toledo will come courtesy of county Treasurer Wade Kapszukiewicz.
Mr. Kapszukiewicz has agreed to purchase a county-issued note worth $18.5 million using funds from the county's investment portfolio. The Lucas County commissioners will pass a resolution to that effect today, and the money transfer will take place May 15.
The commissioners said the money will be used to buy land for the construction site, to pay to demolish the buildings on that site, and to cover architect fees and other start-up costs.
Mr. Kapszukiewicz said he will buy the five-year note at an interest rate of 4.5 percent. Buying the note will save the county $205,000 up front, and an additional $231,000 in interest per year, he said.
The agreement is similar to the one between the county and former Treasurer Ray Kest, in which Mr. Kest bought $6 million in bonds to help pay for the construction of Fifth Third Field.
"This starts the process of getting funds available immediately before we go to the bond market," Commissioner Pete Gerken said. "It's neater and less expensive to use the treasurer's availability than to go to the bond market before we have to."
The county plans to pay for about half of the $85 million arena through a hotel-motel tax that increased from 8 percent to 10 percent on March 1. The rest of the cost will be covered from ticket and suite sales, the sale of naming rights, and other arena revenue.
While a majority of the money will be borrowed on the open market, Mr. Kapszukiewicz said the first chunk is coming from a county investment portfolio that hovers around $250 million.
And until the county spends the $18.5 million it will receive from the treasurer, Mr. Kapszukiewicz said he will manage that money through investments made at local qualifying banks.
The county will begin spending the borrowed money in June, when it starts to execute purchase agreements for land to be used for construction.
Until that time comes, Mr. Kapszukiewicz said the money will earn interest at one or more local banks that already does business with the county.
"Rather than invest the money on Wall Street or through the federal government, we can do it locally and help keep the project local," Mr. Kapszukiewicz said. "This is a role I like. It's a way to use the financial resources of the treasurer's office to help move the community forward."
The county needs to acquire Superior Street between Madison and Jefferson avenues so construction can begin this fall.
Demolition of buildings currently on the new arena site - including the former Club Bijou, the Golden Lily restaurant, and a vacant building on Superior; the Libbey Glass showroom and two other vacant structures on Huron Street; and Subway on Jefferson - is tentatively scheduled for July.
The county has options totaling about $7.7 million on the land where the arena will be built.
Contact Joe Vardon at:
jvardon@theblade.com
or 419-410-5055.