BEHIND CLOSED DOORS

Behind Closed Doors: Westfield candidate questions soccer arena funding

Chris Sikich

The financing of a $25.7 million indoor soccer arena is emerging as the top issue in the May Republican primary in Westfield.

Brian Ferguson, a Westfield City Council candidate, sent a letter to city officials last week accusing them of misleading the public.

Ferguson requested all documents from financial adviser O.W. Krohn and Associates related to the deal. The city sent him a one-page chart showing the difference between a city-backed loan to build the arena and a loan that a private developer could obtain to build it.

The document showed the city could have obtained a 15-year loan with a 3.70 percent interest rate had it financed the arena directly. The loan would have cost $28 million, excluding interest, and an annual payment of $2.47 million.

The other option the document showed — a variation of which the city ultimately chose — was a developer-backed $25.7 million 25-year loan with a 4.30 interest rate, with an annual payment of $1.7 million.

The problem? City officials have said they obtained a lower interest rate by going through the private developer.

Todd Burtron, Mayor Andy Cook's chief of staff, told The Star the side-by-side comparison obtained by Ferguson is incomplete.

The city explored directly financing a 25-year loan, Burtron said. But that would have included a 5.25 percent interest rate, making the annual payments higher than the city wanted to pay.

The city, he said, wanted user fees to pay back the loan. But it couldn't generate enough fees to pay back the 15-year loan in the chart, ruling out that option, though it would have saved millions in interest payments over the life of the loan. The price also was higher — $28 million — because the city was required to carry a contingency fund through direct financing.

Ferguson isn't buying the explanation. He questions why his record request only turned up one document from O.W. Krohn and Associates and why there's no written record of the city-backed 25-year loan option.

Burtron said many of the discussions about the financing deal were verbal.

The City Council ultimately approved a partnership with South Bend-based Holladay Properties. The developer agreed to obtain a loan to build the facility. Westfield will pay back the $53 million loan, which includes interest, during the next 25 years.

The city's debt payments are $1.97 million annually for the first five years, rising to $2.045 million in years 6 to 10, to $2.12 million in years 11-15, $2.195 million in years 16-20 and $2.27 million in years 21-25.

City officials say user fees will cover all of those payments, though taxes ultimately back the loan.

Call Star reporter Chris Sikich at (317) 444-6036. Follow him on Twitter: @ChrisSikich.