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March 21, 2018

2/21/2018 3:17:00 PM
Council Considers Funding Options for New Crown Center
By Shawn Jones

City Council faced a sobering assessment of the overall costs and funding options for the new Robert Crown Center at its Feb. 19 meeting, but aldermen ultimately agreed to proceed with the project.

Staff and their experts expect the total project cost to be about $48.5 million, up from an earlier estimate of $40 to $46 million. Ald. Wilson told the  RoundTable he felt “pretty confident about this [$48.5 million] number,” despite the fact the City Budget passed just last November contemplated a $40 million pricetag, because the experts, including the architect and construction companies, have weighed in. He said he wanted a real number, because he did not want anyone coming back asking for additional funds,” he said. Were the City to cover these costs with property taxes alone, a 3.3% increase in the City portion of a homeowner’s property tax bill would hit in 2019, followed by a 0.7% increase in 2020 – for that project only. The City’s portion of the property tax bill is about 20% of the overall bill.

Many factors could operate to lower any property tax increase related to the project, however. To date, the Friends of Robert Crown Center, a private fundraising group charged with, in part, seeking donations to help fund the project, has secured funds and pledges totaling more than $11.1 million. Peter Giangreco, Secretary of FRCC, said the group recently revised its fundraising goal from $10 million to $15 million. The goal roughly triples the initial estimate – $4 to $6 million – put forth by fundraising consultants before the effort began in earnest, said Mr. Giangreco.

Any additional funds raised through private donations would lower the amount the City must borrow, and therefore would reduce the amount of annual debt service needed to pay down general obligation bonds.

Regardless of fundraising efforts, said Erika Storlie, Deputy City Manager, the City will need to borrow $22.5 million this year, and the Library another $1.25 million, in order to meet the scheduled opening date. “We have a very aggressive timeline to construct this building,” she said, “but it is necessary, because many pledges are contingent upon the building’s being open next fall.”

Pledged donations will arrive intermittently over the next five to seven years, though, and construction must begin immediately. The City must go to the bond market this summer to fund such immediate construction.

This year’s bond issuance will be followed by another $11 million bond issuance by the City and a $1.25 million bond issuance by the Library in 2019. Ms. Storlie said the 2018 bonds will be payable on a 25-year schedule, as opposed to a customary 20 years, and the Library bonds  will be payable in full in 2023.

Other than 2023, said Ms. Storlie, the Robert Crown bond issuance would not affect the City’s regularly scheduled capital improvement projects. Currently, the City borrows about $9 million every year for capital projects. The Robert Crown bonds would permit this borrowing to continue, though any additional projects would likely need to be funded in other ways. In 2023, she said, the City could take on no capital debt unless the 2019 bonds were refinanced or abated by donations, but the City has time to plan for that.

City Manager Wally Bobkiewicz rattled off a partial list of projects looming in the City’s future, all of which have impending capital needs. “We have 74 other parks,” he said. The Civic Center and the Police and Fire Department headquarters have capital needs. “We will not be able to” fund these projects via bond issuance, he said, if the City uses all of its borrowing capacity to fund Robert Crown. He said he foresees a need to reduce expenses, cut staff, possibly reduce services, or raise revenue elsewhere to prepare for the coming budget crunch.

Mr. Bobkiewicz said he would begin 2019 budget discussions with a presentation in March. The City needs to “begin these reductions now if we’re going to be able to grapple” with pressure from underfunded pensions, capital needs, Robert Crown, and other budgetary requirements. “The money we have been spending is not sufficient to meet our [capital] needs,” he said. “We are going to have to address other capital needs.” Later, he added he has never in his 16 years as a city manager called for a budget discussion as early as February or March for a budget beginning the following January, but this year circumstances call for it.

“Clearly Robert Crown is on the top of the list [of City needs],” said Mr. Bobkiewicz. “I just wish it was the only thing on the list. But it is not.”

The Crown borrowing would also affect the City’s self-imposed debt limit. Currently, the City has set a $113 million ceiling for outstanding general obligation bond debt. This debt does not include police and fire pension debt or some water and sewer debts. The City’s current debt amount sits at $112.67 million, said Ms. Storlie. She suggested increasing the limit to $150 million.

The amount of outstanding debt affects the City’s bond rating with the rating agencies. A lower rating means higher borrowing costs. Interest rates are now about 4%, but could increase if the bond rating goes down. Bill Stafford, a former City and School District 202 financial officer, said he did not believe Crown debt would result in a rating decrease because of the private donations and extensive City planning, but added debt on top of Crown might.

Several members of Council appeared caught off guard by the prospect of significant property tax increases to cover Crown debt service. “I don’t feel like I have enough information to roll the dice on a property tax increase,” said Alderman Peter Braithwaite, 2nd Ward. He said the City should consider other funding mechanisms, including the selling off of City assets such as public property. “With Robert Crown being the asset that it is, then that should be on the table,” he said.

Alderman Ann Rainey, 8th Ward, called for the approval of downtown developments as a piece of the funding puzzle. “I can see no reason why a contribution to the construction of Robert Crown can’t be a public benefit from developers,” she said, referring to the proposed Northlight Theater project as well as the rejected 601 Davis project.

Already property tax burdens have contributed to a growing number of homes on the distressed properties list, said Alderman Robin Rue Simmons, 5th Ward. She said she felt like she did not have enough information to push the project forward.

“I don’t support putting the burden on taxpayers,” said Ald. Rainey.

Others indicated support, however. Alderman Judy Fiske, 1st Ward, said, “To me, this is the most important project for us to do [and] a project we need to get behind 100%.”

Alderman Don Wilson, 4th Ward, who has been involved with Robert Crown discussions almost since the day he was elected two terms ago, said the City had to move forward with the project. “We put our faith in the community to deliver, and they really did,” he said, referencing the $11.1 million in pledges as well as the work done in design. About the current Robert Crown Center he said, “The ice facility is on borrowed time … When the equipment fails, I’d not be willing to put millions into” repairs or rehab. “We cannot board up the building,” he said.

The new Crown proposal includes a maintenance fund, said. Ald. Wilson. The proposal contemplates a $200,000 per year deposit into the maintenance fund so that when things need repair, “and they will, there is money in the bank.” The new Crown will not enter crisis mode as a result, and the City will not be going back to the community asking for more money for repairs, he said.

“One thing I don’t agree with is the only way to pay for this is to extract money from homeowners,” said Ald. Rainey.

Mr. Bobkiewicz said he agreed. Debt service for the 2018 bond issuance is expected to total about $1.5 million a year. [Council can pay for that amount however they choose, he said.  The property tax increase put forth is just one possible option]

Mr. Stafford said the City funding presentation was extremely conservative and did not account for three factors likely to reduce the amount of actual debt. First, the proposal anticipates $10 million in donations, but if the committee reached its $15 million goal, then less will need to be borrowed.

Second, the proposal does not account for revenue the Center will generate, and revenue generated may be sufficient to cover both operations and some debt service.

Third, the 2019 bonds may be refinanced and folded into overall debt, resulting in savings.

“I am really frustrated with the all-or-nothing discussion,” said Ald. Braithwaite. “We either increase taxes, or we don’t go forward with Robert Crown tonight.” He again called for the sale of City assets as a way to fund the Crown Center project.

Mayor Stephen Hagerty said, “The way the City has presented this is the tax would [increase] if everything stays the same. It does not mean at the end of the year you have to get the $1.5 million [in added debt service] through property tax increases.”

“I didn’t take it as an all or nothing proposal at all,” said Ald. Wilson. “There may be future opportunities” to generate revenue. “At some point, you have to pull the trigger.” City Council needs to decide whether to go forward or not, he said. “If it doesn’t go, we’re going to lose the $11.1 million” in donations. “We have to make a decision,” he said.

The property tax increase was put forward as a discussion item to show what would cover the project if Council found no other way to pay. Mr. Bobkiewicz referred to the revenue coming in from the new Lyft and Uber tax as one possible source. Whatever the funding source, however, he agreed with Ald. Wilson that a decision needed to be made.

“We need direction” said Mr. Bobkiewicz. “There are multiple decision points ahead of you” including next week, when the City will bring forward a contract for the project’s construction manager. The City has already spent more than $500,000 on fundraising and architectural and engineering fees, he said.

Ultimately, Council agreed to move forward. Whether the project results in the worst-case scenario – a 4% increase in the City’s portion of the property tax – will be decided during the 2019 budget discussions.

When Alderman Cicely Fleming, 9th Ward, asked when a decision had to be made on taxes, Mr. Bobkiewicz responded, “before the fourth Monday in November.” On that date, Council approves a budget and sends tax levy information to Cook County.

ZBA Recommends Three of Four Variances for Robert Crown

By Larry Gavin

On Feb. 20, the City’s Zoning Board of Appeals heard an application for major variances needed to move forward with the construction of a new Robert Crown Center. The application was filed by Brian Foote, an architect with Woodhouse Tinucci Architects, as agent of the City of Evanston, the owner of the property.

The proposed project is to construct a new two-story, 134,200 square foot community center that will contain two ice rinks, a gymnasium, a public library, a pre-school, and multi-purpose rooms. The existing athletic fields will be replaced with new turf fields, the existing tennis courts will remain, and there will be more than 225,700 square feet of outdoor recreation space, says the application.

The drawing below is the floor plan for the first and second stories of the proposed new community center.

The City is requesting four variances: to provide 225 off-street parking spaces, where a minimum of 334 are required; to provide 23-foot wide two-way drive aisles, where a minimum of 24 feet is required; to provide no loading docks, where a minimum of two are required; and to allow a floor area ratio of 0.18, where there is a maximum of 0.15.

The ZBA decided by a 5-0 vote to recommend that City Council approve the variances relating to parking, the loading docks, and floor area ratio. The ZBA decided by a 5-0 vote to recommend that City Council deny the variance to allow 23 foot wide drive aisles. The matter moves on to City Council for decision.

The floor plans for the first and second floors plans of the proposed community center that are part of the application are shown at left.



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