The Denton city staff posted a dozen different financial scenarios for the convention center financing to the agenda packet from last week. They weren’t there when the packet first went up, but got added later.
(Go here. Click on the 10/28 agenda. Scroll down to the convention center item, click on Exhibit 5, Scenarios Detail.)
Right away, you can rule out several of them because they include tax contributions from the county and school district. (It’s bothersome that neither body voted, so that the rejection could be on the record. But there you have it.)
The difference in the cost to the city in some of the scenarios is striking. For example, financing the $28.98 million project over 25 years and 30 years greatly increases the ultimate cost. Scenario 3 (4 percent debt over 25 years with a 78 percent full hotel to help out) means the convention center’s ultimate cost is $45.4 million. Scenario 10 (6 percent debt over 30 years with a 69 percent full hotel to help out) means the convention center’s ultimate cost rises to $60.8 million … a $15 million swing for the city.
The developer’s contribution swings about as wide between those two scenarios, from $5.5 million to $13.2 million.
Scenario 12 may explain why the developer has pushed the city to go to 30 year financing, without offering any support those last five years.
A poor performing hotel with the hotel on a 25 year note at 6 percent means the developer’s contribution toward the debt rises to $17.4 million.
Even small increments mean big dollars over the life of the deal.