Local view: Arena JPA is best for taxpayers
Lincoln Journal Star
February 4, 2010
By Mayor Chris Beutler
Transparency, accountability and a good deal for taxpayers are the reasons why a Joint Public Agency makes sense for the proposed Lincoln Haymarket Arena.
In her Wednesday opinion column, Lincoln Journal Star writer Deena Winter speculated about the city's reasons for utilizing a JPA in cooperation with the University of Nebraska for the proposed Lincoln Haymarket Arena.
A JPA is a mechanism created by the Legislature to encourage cooperation among different levels of government. The members of the JPA in this case are the city of Lincoln and the University of Nebraska-Lincoln. Intergovernmental cooperation is a key to eliminating duplication and providing the best value for the taxpayer dollar.
A Lincoln Haymarket Arena JPA makes sense for these reasons:
Transparency. The JPA is a separate authority with its own budget. A citizen can look in one place and immediately know all of the arena expenditures. I promised the citizens a clear explanation of where the money will go, and the JPA provides it. That's what transparency is all about.
Accountability. With the JPA, citizens are assured that money is being spent as they intended. Since the JPA represents a separate accounting for the arena, revenues will not flow through the city's various accounts. Segregating the arena revenue ensures that they are not diverted to other uses. Omaha earmarked an occupation tax to fund the Qwest Center's debt service. Until that debt service came due, the money was spent to fund a portion of the city's operating budget. Under a JPA scenario, that could not happen.
Tax savings. The taxpayers receive the best financing deal if the JPA bonds are backed by the city's full faith/credit, saving millions of dollars in interest costs. If the city simply issued the bonds, we would lose the additional transparency provided by the JPA.
The city issues bonds for a variety of its operations to keep pace with the needs of our residents. Our ability to issue these bonds and maintain the lowest possible interest rate is related to how much debt the city has on its books. The JPA allows us to more accurately apply the debt to the arena project while still maintaining the city's low interest rates for other needs.
Partnership. The UNL Athletic Department will be the primary tenant and needs to participate in the decision-making process to provide a forum to deal with the landlord-tenant issues that could arise as the project moves forward.
The ballot vote on a $25 million bond, funded by the state "turn-back tax," is one component of the $344 million project (including the arena and all associated infrastructure). The "turn-back tax," allows sales tax generated by the area, and the arena, to pay for the bonds. By state law, those bonds cannot be issued without a vote of the people. The remaining bonds do not require a public vote and will be issued by the JPA. In short, we chose this course of action to follow the law. As I have stated in the past, the project will not go forward without voter authorization to issue the bonds.
I take issue with Winter's theory that the "overriding reason" for the project's structure is to make it easier to pass. The JPA concept offers the best of all worlds: the lowest cost for taxpayers combined with a clear, single source accounting of where the money will be spent.
The city has accurately portrayed the cost of the arena project, as Winter's own story on Sunday demonstrates. We have been very clear that the debt associated with the ballot question is not the only cost associated with the arena.
Please visit lincoln.ne.gov to see all the arena project numbers.
