The upwardly spiraling price of a new, publicly financed ice hockey arena has finally stopped, according to City Manager John Patterson.
Patterson said the arena's builder on Thursday afternoon signed a contract promising to keep construction on the West Valley Event Center below $37,786,000.Turner Construction Co., a national conglomerate with a recently opened office in Salt Lake City, also agreed to finish the project by Sept. 19, 1997, in time for the 1997-1998 hockey season.
Thursday's pact brings total project costs to $53.3 million, when land and debt service are included. Through an arcane set of local funding measures plus outside subsidies and rent, the city has identified just over $51 million in funding for the project.
In their initial pitch for the project last year, city officials said the arena would cost less than half that. Later they said they'd failed to mention land costs. As recently as January, city managers said construction alone on the 10,400-seat arena would run only about $28.5 million. A few weeks later, they increased the estimate to $34.5 million, after adding an upper tier of seats and a second concourse. In mid-March, citing what they said was an unforeseen increase in concrete costs, they tacked another $1.5 million onto the construction total, bringing it to $36 million.
Thursday's $37.8 million figure is a "guaranteed maximum price," said Patterson. The contract between Turner and West Valley City includes incentives encouraging Turner to find low-bid contractors. It allows the company to collect as much as $80,000 in bonuses for shopping subcontracts to the most competitive bidders.
"It's not bad when you consider that it's design-build," said Patterson, noting that the project is on a fast-track schedule that adds considerably to expenses.
The deal is the first of three steps the city has planned toward ensuring the arena's completion. By mid-June, city officials expect the Utah Grizzlies to sign a 20-year lease that would require the minor-league hockey team to pay West Valley City $1.2 million per year in rent. That agreement would pave the way toward an approximate $30 million bond issue in July.
Patterson said the exact cost of the project will still depend on financing terms, but predicted it would be close to Thursday's $53.3 million estimate.
Utah native Mike Iker will supervise the construction for Turner, which broke ground earlier this spring with a $2.5 million grant from the city.
The Grizzlies, who play in the Delta Center in downtown Salt Lake, expect to take up residence in West Valley City as the 1997-1998 International Hockey League season begins.
Arena construction: CASH FLOW
Where WVC says it's going:
Building contractor $37.8 million
30-acre site $9.25 million
Debt service for 20 years $6.25 million
Net cost $53.3 million
Where WVC says it's coming from:
Rent from Utah Grizzlies $24 million
(@ 1.2 million a year/20 years)
Salt Lake Olympic Committee $7 million
State Legislature $1.9 million
Naming rights* $3 million
Parking revenues $5.6 million
(@ $3/car for 111 annual events
$279,675 a year/20 years)
Ticket tax revenues $11.9 million
(@ $1/ticket for 111 annual events
for 20 years/avg. attendance of 5,374
$596,500 a year/20 years)
West Valley City public sources $21.96 million
(General fund, $2.5 million; RDA,
$3 million; parks and recreation fund,
$6.4 million; city "interfund loan,"
$5 million; increased sales tax associated
with arena, $2 million; hotel tax,
$200,000; interest earnings on
construction fund, $1.36 million;
special improvement district,
Sub total $75.36 million
Minus operating expenses $24 million
(salaries, wages, utils., etc
@ $2 million a year/20 years)
Net revenue $51.36 million
Source: West Valley City documents and officials' public statements