Tuesday, June 23, 2009
Thunder facing arena challenges
OKLAHOMA CITY -- City officials are reassessing an ongoing $100 million renovation of the arena where the Oklahoma City Thunder play, because a sales tax that was supposed to fund it has brought in less money than expected.
With shoppers buying less so far this year, the tax approved by voters as a way to lure the NBA's Seattle SuperSonics to town -- where they were renamed the Thunder -- has produced $4.2 million below projections.
"It's a point of concern," said Tom Anderson, the city's special projects manager. "When the initial projections were done, sales tax was riding high."
A report presented to the City Council on Tuesday showed that the one-penny sales tax increase has yielded $29.8 million so far, or 12.6 percent less than the $34 million projected. The numbers include actual taxes collected from January through April, as well as projections for major taxpayers for May.
Anderson said the city has asked construction firm The Benham Cos. to send in a new estimate for the cost of the renovations. The city also is working on an updated projection of how much the sales tax will generate before it runs out at the end of March.
Senior city staff members will review those figures later this week and present them next week to a board that oversees the renovation.
If the gap between the expected cost and incoming revenue doesn't improve, the city can start trimming projects or seek new modes of funding, such as tapping into a use tax fund of $3.1 million.
"What I don't want to do is a knee-jerk reaction and do something that we don't have to. I want to wait as long as we can before we make a decision, to get as much information as possible," said Councilman Patrick Ryan, the chair of the Sports Facilities Oversight Board.
Voters approved the 15-month sales tax in March 2008 as a way to lure the SuperSonics, who had been bought by Oklahoma City businessman Clay Bennett. The tax was intended to generate about $100 million for the Ford Center overhaul and an additional $20 million for a practice facility. Construction on the practice facility is expected to begin in August.
The city has been looking at ways to keep the Ford Center project within the wavering budget. A new scoreboard expected to cost $5.5 million was instead found for nearly $1.6 million cheaper.
"We want to explore all options that are going to maintain that quality but might be more cost-effective. One example is we've looked at a variety of flooring treatments. ... We've looked at everything from Terrazzo to tile," Anderson said.
Anderson said the city has been working closely with the Thunder, the arena's highest-profile tenant, throughout the process. Dan Mahoney, the team's spokesman, said the Thunder would not engage in a public discussion of the arena upgrades and would defer any comment on the funding situation to the city.
He would not say whether the franchise would prefer to spend its own money on the upgrades rather than having the city make cuts.
As of May 30, the city had spent $11.5 million on the renovation and had committed an additional $30.3 million. The third and final phase of the renovation won't begin until next summer.
The new estimates will provide a gauge on the shortfall the city can expect, and what affect it would have on the renovation.
"If you're talking about a million dollars, then we can look at tweaking it. If you're looking at $10 million or $15 million, then you're looking at not doing something the way it was proposed or not doing it at all," Ryan said.
The renovation project includes a new locker room and practice gym along with new suites and restaurants. Ryan said items requested specifically by the NBA would likely be the last to be taken out.
"We want to keep the necessities in there and look at the niceties," he said.