West Side Arena: A deal with too much riskEDITORIAL
June 09. 2014 10:51PM
Manchester’s Board of Mayor and Aldermen is scheduled to vote tonight on a contract that would require the city to borrow $1 million — explicitly backed by the taxpayers — for renovations on the West Side Arena. The newly formed non-profit group that would operate the arena puts up no cash up front, and its managers and directors post no letters of credit or any other personal guarantees to ensure that the $1 million can be repaid. That is a bad deal the city should not accept.
The taxpayers are to back a $1 million, 10-year loan to pay for renovations the city cannot afford to make. The loan supposedly will be repaid by West Side Renaissance Park, Inc., a 501 (c)(3) non-profit group, which projects $755,000 in annual revenue from managing the arena by 2018-19. But on what are those projections based? West Side Renaissance Park’s own proposal notes that the arena’s attendance has declined due to competition from other nearby venues. The apparent plan is to use city money to fix up the arena, then watch the crowds come back. But the proposal to the city does not show how the management group will increase attendance.
The only security West Side Renaissance Park offers against default is a $30,000 annual payment into a separate account, made until the account totals $300,000. That would take 10 years. The $1 million bond is a 10-year bond. The arena manager’s “security” deposit would be filled only after the bond is already paid off — by the taxpayers.
Aldermen should reject this proposal and issue a request for proposals. Hiring a private manager for the arena is a good idea. Taking on the risk inherent in this deal is not.