Cape Girardeau City Council opts to use $2 million in casino money to pay airport bonds

Tuesday, March 8, 2011

Weeks before it was even a certainty that a casino would be built in Cape Girardeau, city officials planned out how to spend $2 million in up-front money from Isle of Capri. They focused on major amenities to Broadway as well as 11 other projects, ranging from dog parks to trail-connecting sidewalks.

Now, the money will be spent elsewhere.

The Cape Girardeau City Council opted Monday night to use the money instead to pay off $1.69 million in bonds that were issued in 2001 to build a manufacturing facility at the Cape Girardeau Regional Airport. The remaining $306,500 will be used to shore up the city's emergency reserve fund, which was depleted to handle the ice storms of recent years.

The airport facility currently houses Commander Premier Aircraft, but the aircraft manufacturer was given a 60-day notice last month because it owes $1.2 million in back lease payments. That left the city to make bond payments that should have been covered by Commander's lease payments. If Commander doesn't come up with the money, it will be forced to vacate and has been given written notice.

"Commander's days of free rent are numbered," council member John Voss said Monday night.

Those bonds can be paid off April 1, one of the city's semiannual bond payment dates, said city finance director John Richbourg. The next payment date wouldn't come until September, nearly four months after Commander will likely be forced out of the building.

Under the current bond structure, the facility can only be used for airport-related manufacturing because those bonds are tax exempt. Repayment of those bonds would "make it easier to market the building," Richbourg said in a staff memo.

The city received the $2 million from Isle of Capri for roughly 11 acres the city transferred to the company. Originally, the city had planned to use $1 million toward amenities to Broadway, including historic lighting, trees and benching. The other $1 million was to be used for 11 projects that the council spent three hours deciding on in September.

Those projects included trail-connecting sidewalks on Kingsway Drive, designing a streetscape in the riverfront area and for walking trail lighting and widening at Arena Park. Smaller projects that were to be paid for from the money included two dog parks, accelerating the tree-planting program, and, coincidentally, to help pay for a study to market the Commander building.

Under the new proposal, which the council gave first-round approval to Monday night, those projects will still happen, but they will come from different funding sources. The Broadway improvements will be funded by the Transportation Trust Fund IV sales tax until the fund can be reimbursed from casino funds after it is opened. All the other projects could be paid for from revenues from the first year of casino operations, Richbourg said.

City engineer Kelly Green said it was possible that borrowing from TTF money could push some transportation projects behind schedule, although by a few months at most.

"I'm going to have to change my schedule," Green said. "I'm not sure which projects it could push back, because this is news to me, too. But Broadway is still at the top of our lists."

The TTF IV is scheduled to fund $2.85 million to widen Broadway from Pacific to Water streets, and construction is still on schedule for this year, she said. There are 11 other projects on the list that total $21 million.

The city's development agreement with Isle of Capri specifically calls for the $1 million of the money from the land sale to be used to pay for amenities to Broadway, such as the historic lighting and benches. But Paul Keller, Isle's chief development officer, said he did not consider the change in plans a violation of the agreement.

"The city is now the stewards of that money," Keller said Monday night in a telephone interview. "As long as Broadway gets beautified and as long as there are public improvements, the spirit of the agreement has been kept."

Other advantages to the new proposal, said council member Mark Lanzotti, include saving $45,000 in fees to issue new bonds, which also had been an option. The move also provides the potential to produce revenue from the building as soon as a tenant can be found and will save the city the money it had been spending to repay the current bonds.

smoyers@semissourian.com

388-3642

Pertinent address: 401 Independence, Cape Girardeau, MO

Map of pertinent addresses

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