COUNCIL CONSIDERS RENOVATION PLAN FOR ARENA BUILDING

Finding enough money in the city budget to pay for remodeling buildings or equipment purchases is not an unusual task for city finance director John Richbourg.

But for a relatively small remodeling project at the A.C. Brase Arena Building, at estimated costs of $230,000, the city chose a different-than-usual route for financing the work.

At tonight's city council meeting, members are expected to approve a lease-purchase agreement between the city and a Sikeston bank to pay for the renovation costs to the Arena Building and the city's share of improvements to the Cape Girardeau Regional Airport for the Zenair project.

Zenair of Canada Ltd. is an airplane manufacturing plant that has announced a plant opening at the airport. Improvements to the water and sewer lines were needed before the company can begin its operation here.

A similar lease-purchase agreement tentatively was approved by the council last month, but it did not include an additional $260,000 for the airport improvements.

The only thing that sets the Arena Building project apart from other city renovation projects is that it is a small amount, Richbourg said.

Cities issue bonds frequently to pay for improvements like building repairs, equipment purchases and the like. Most of those bonds don't require voter approval.

Two projects with funding sources similar to the Arena Building renovations were the Shawnee Park Complex and the Osage Community Centre projects.

Both were funded by bonds issued by the city. The bonds will be retired with excess revenue from motel and restaurant taxes.

The total bonds issued in 1993 for the Shawnee and Osage projects were $3.795 million. Ten percent of that amount is used for debt service reserves, leaving $3.415 million still to be repaid by the city.

Most of the bond repayments have identified sources of revenue, Richbourg said, but the money doesn't come in one lump sum because it is collected as tax revenue over a period of years.

By issuing these bonds, there is no direct impact on the taxpayer, and the bank and borrower are the same: the city, he said.

When looking at bond issues, "the value of the building is not always as important as the necessity of the building," Richbourg said.

The city couldn't afford to close the Arena Building for a long-term renovation project while it waited to collect enough money to complete the work. So the work will be scheduled around rentals and events held in the building.

And by choosing a lease-purchase loan to pay for the remodeling costs, the building's title never passes to the bank for the term of the lease. The city retains ownership.

However, if the city were to default on the loan, the building could be operated by the bank for the remainder of the lease, Richbourg said.