Broomfield’s Urban Renewal Authority on Tuesday approved the city’s financing plan for a new sports and entertainment arena, clearing the way for a $60 million bond sale next month.
The authority said RBC Dain Rauscher, the company that sold bonds for Denver’s failed Ocean Journey aquarium, will handle the sale.
The arena, expected to open in late 2006, is part of Arista, a 200-acre retail and residential development along U.S. 36 between West 108th and 120th avenues.
Bonds for the arena are expected to be sold the second week of October.
The 6,000-seat venue, called the Broomfield Event Center, will host concerts, trade shows and sporting events. It is the expected home for new minor-league hockey and basketball franchises that will begin play in 2006.
The city will use tax-increment financing to service the $60 million debt, relying on property and sales taxes to make maximum yearly payments of $4.49 million, Broomfield finance director Greg Demko said.
The risk “to Broomfield is pretty much zero,” Demko said, adding that the bonds are backed by letters of credit from BNP Paribas’ San Francisco branch and from developers John Frew and Tim Wiens. “There is no (additional) burden on existing taxpayers.”
Property taxes from the 1,200 planned townhouses, condos and apartments, new retail stores and offices will pay a majority of the bonds.
The Broomfield authority has earmarked a portion of sales tax derived from businesses within the Arista development to pay the balance.
“As long as development occurs within a reasonable amount of time, (the payments) will fit fine,” Demko said. “It is dependent on growth and development.”
Buyers for the bonds should be found quickly, said Rus Heise with RBC Dain Rauscher.
The bonds “will sell very quickly – less than a day,” Heise said, adding that money-market funds are the most likely buyers. “The bonds have a letter of credit, so they are very highly rated.”
The bonds will carry a rating equivalent to AA, Heise said. That’s the third-highest grade. And it’s eight levels above high-yield, or “junk,” bonds.
Christopher Johns, a portfolio manager at Denver’s Kirkpatrick Pettis Capital Management, said his group might invest in the project, depending on the structure and sources of revenue.
“Conceptually, it’s something we would consider,” Johns said. “We’ve seen several similar projects around the metro area that have been successful.”
Staff writer Will Shanley can be reached at 303-820-1260 or wshanley@denverpost.com.
