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Lucas County Arena Action Plan Submitted To: Lucas County

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Lucas County Arena Action Plan Submitted To: Lucas County Lucas County Arena Action Plan August 9, 2006 An Action Plan for the Development of a New Multi-Purpose Arena Linked to the SeaGate Convention Centre Submitted to: Lucas County Commissioners TABLE OF CONTENTS Lucas County Arena Turning Talk Into Action: An Action Plan Submitted to the Lucas County Commissioners for the Development of a New Multi-Purpose Arena Linked to the SeaGate Convention Centre SECTION 1 Executive Overview SECTION 2 Site Selection Review SECTION 3 Preliminary Convention Center Study SECTION 4 Determination of Arena Size SECTION 5 Funding and Financing SECTION 6 Governance Plan SECTION 7 Project Delivery Process and Project Timeline SECTION 8 Tenant Selection Process SECTION 9 Next Steps SECTION 10 Exhibits Section 1: Executive Overview Executive Overview Lucas County Arena Action Plan | Page 1 Section 1: Executive Overview Executive Overview The Lucas County Commissioners contracted with the team of Pizzuti Solutions LLC, Garfield Traub Development and Gateway Consultants Group, acting as the Project Fiscal and Management Consultant, to create an Action Plan for the development of a new multi-purpose arena linked to the SeaGate Convention Centre in downtown Toledo. The team is pleased to present a comprehensive Action Plan that meets the needs of Lucas County and its residents. In completing this Action Plan and formulating the team’s recommendations, certain assumptions were made. The recommendations contained in the plan are not the only workable solutions to bringing a new downtown arena to Lucas County, and the planning team recognizes that a certain degree of flexibility may be required as the project moves forward. Following is a brief overview of the major topics addressed in the Action Plan. Site Selection Following an extensive review of potential arena locations, it was determined that five sites were sufficiently close to the SeaGate Convention Centre to allow for the development of physical connectors between the convention center and a new arena. A physical connection would aprovide operational and development benefits such as the combined use of some “back of the house” operations, savings from combined management, and the use of the arena floor as additional flat exhibit floor space for the convention center. The action plan team concluded that connecting the new arena to the convention center would allow the new facility to complement the economic impact of the convention center and Fifth Third Field, rather than serving as a competitor. This arrangement would assist in the cross-marketing of events that could be staged in both the convention center and arena, and could lead to possible related development of restaurants, specialty retail and innovative housing options in the Warehouse District and the area north and west of the convention center. This type of development has been nurtured in recent years by the presence of Fifth Third Field, and would likely increase if an arena, with its year-round event-booking capability, is added to the area. Preliminary Naming Rights Study Gateway Consultants Group conducted a first-phase naming rights study relative to the SeaGate Convention Centre. The opportunities and challenges associated with pursuing a naming rights sponsorship for the convention center were addressed in this report. Lucas County Arena Action Plan | Page 2 Section 1: Executive Overview The possibility of a new downtown arena linked to the SeaGate Convention Centre was considered throughout the course of the convention center naming rights study. At the time, it appeared likely that potential sponsors might be hesitant to consider a naming rights deal for the convention center because of the uncertainty of the possible arena project. However, an arena built in connection with the convention center would present an opportunity for an entity to put its name on the entire complex rather than on just one facility or the other. The newly built arena would also likely attract potential naming rights sponsors because it would be a new facility with all of the exciting visuals as well as the media and public enthusiasm that naturally accompany such an effort. Determination of Arena Size The recommendations relating to arena size are the result of the “Phase II Market Financial Feasibility Study” conducted by Convention Sports and Leisure (CS&L), a nationally known firm. The study involved a review of arena capacities in comparable markets, a review of suites and premium seating in the Toledo market, interviews with league officials and concert promoters and a survey of corporate users in the local market. The CS&L study concluded that an arena with a fixed seat capacity of between 8,000 to 9,000 seats would accommodate the attendance projected for minor league hockey and indoor football events. In addition an arena with close to 10,000 total seats for concerts would attract the majority of touring shows and family events. Therefore the team has recommended that two arena sizes be considered. Depending upon the final bowl design and seat configuration, an 8,000 fixed-seat arena could accommodate 9,500-10,000 attendees for concerts; a 9,000 fixed-seat arena could accommodate between 10,500 and 11,000 for concerts. Premium seating for either arena size would be composed of private suites, loge boxes and club seating. Funding and Financing The expertise of two national construction firms and a review of comparable arena construction costs were the basis for estimating the cost of constructing a new Lucas County arena. Without a detailed program and design scheme, the construction cost estimates were based on industry experience and comparable per square foot costs. The estimates were then projected for a construction period to begin in the third quarter of 2007 and adjusted for construction costs in the Toledo area. The projected operating revenue to be generated by the new arena is dependent upon the sports teams and programs that are anticipated to be tenants in the arena. Two scenarios were considered as revenue estimates were completed:. The first with an East Coast Hockey League (ECHL) franchise, and the second with an American Hockey League (AHL) franchise. Lucas County Arena Action Plan | Page 3 Section 1: Executive Overview Indoor arena football teams were also identified as potential tenants. For non-tenant events, the arena would likely attract concerts, family shows such as Stars on Ice or Sesame Street Live, along with local and non-tenant sports events. Studies indicated that the arena would host between 127 and 131 events annually, and attract 513,000 to 551,000 attendees. After consulting with bond counsel and investment bankers familiar with the specific legal and financial aspects of financing a public facility such as the arena, it was determined that Lucas County has the financial capacity to fund the development of the project. This could be done through extending the hotel-motel tax and by the early retirement of the debt on the SeaGate Convention Centre. Other public components of the arena funding could come as grants from sources such as the Ohio Cultural Facilities Commission and the U.S. Department of Transportation. Additional funding would come from the private sector in the form of naming rights and private suite and premium seats, as was done successfully in the development of Fifth Third Field. The Action Plan also addresses the potential economic impact for Lucas County when the new arena is built. A detailed review and summary of the CS&L study is included as well as information gathered from a review of similar studies summarizing the impact of comparable facilities, and interviews with community leaders and public sector staffers from communities with multi-purpose arenas. Governance Plan The recommended governance plan for the new arena was developed after consideration of several operating options available to the county. The new arena, as a regional asset, should be designed, built, owned and operated by a to-be-formed not-for-profit corporation. The new corporation would be incorporated pursuant to the Ohio Revised Code, and would act on behalf of the county to develop and operate the arena and the renovated SeaGate Convention Centre. This recommendation was made because of the complexity of arena and convention center business, which may require more flexibility than county governance could easily accommodate. Additionally, this operating model would allow the county to maintain appropriate oversight and supervision through a board of trustees to be appointed by the county commissioners. Project Delivery Process and Project Timeline A review of potential project delivery mechanisms was conducted. The team engaged Project Management Consultants LLC (PMC), to assist in this analysis, which was done in the context of the existing statutory framework that governs public construction projects in Ohio. Lucas County Arena Action Plan | Page 4 Section 1: Executive Overview In addition, the possibility of a statutory change to allow different methods of construction delivery, including a “design build” option, was explored. However, it is recommended that the project proceed under the existing statutory framework. This will avoid political challenges in the General Assembly, while also keeping with the methodologies familiar to the contractor community. Tenant Selection Process The presence of one or more stable and successful sports franchises as tenants is a key to the long- term financial success of an arena. For purposes of the action plan, several potential tenant franchises were considered, most notably a minor league hockey franchise and a professional indoor arena football franchise. In determining the best tenants for the new facility, it is recommended that the county consider a league’s financial strength, longevity, promotion and historical attendance in comparable markets. Additionally, the county should focus on the individual franchise and the financial strength of the ownership group. The County should also consider the purchase of either an ECHL or AHL minor league franchise, possibly under the same ownership framework and entity employed for its ownership of the Toledo Mud Hens.
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