New lake financing terms to alter payback strategy

Story By Diana Whittle

Photo by Billy Hardiman

tempe_fireworks_07Town Lake remains a unique
attraction, an oasis in the
desert, an amenity that fulfills
the critical mission of flood control
while serving as a catalyst for myriad
recreational opportunities.
The surrounding park hosts a range
of special events, concerts, races,
exhibits and the lakefront’s crown
jewel, Tempe Center for the Arts.
Yet for all its obvious value to the
community, the project’s development
lags behind the city’s expectations.
Some blame the economic
downturn, a condition that prompted
Tempe’s Enhanced Services
Commission to decide an economic
reality check was in order.
As part of their work, the
commission’s members drafted
recommendations for a revision to the
financial structure of the Rio Salado
Community Facilities District to help
make payback terms more favorable to
business development along the banks
of Tempe Town Lake.
In a unanimous vote on July 30,
Tempe City Council agreed to the
changes, which the members felt could
boost momentum to new investment
and add parity in loan repayment to
the city for its initial outlay in the
construction of Town Lake, as well as
for the lake’s annual maintenance and
operations costs.
In introducing the agenda item
to the council, Mayor Mark Mitchell
stressed that the new financial plan is
between the city and the Rio Salado
District. It does not impact the city’s
budget; neither does it increase
residents’ taxes nor delay planned
improvements to community parks.
Mitchell asked Ken Jones, Tempe’s
director of finance and technology, to
clarify the terms of the plan.
“The Enhanced Services
Commission recommended a plan that
would lower an annual holding fee that
developers pay until they build on their
lake property. In the revised plan, this
fee will drop to the rate of inflation,
which is currently 2.2 percent from the
existing 5 percent.”
The annual interest rate, which
developers pay to the city over a
25-year term for their share of lake
construction, also will drop, according
to Jones.
In an earlier effort to drive
development, the City Council revised
the financial plan both in 1995 and
again in 1997.
The 2-mile Town Lake opened
in 1999, with plans calling for
development on the 120 acres
surrounding it and to generate
assessment fees covering 60 percent of
annual operation costs.
Long term, the city hopes to secure
sufficient private development near
the attraction to ease the costs of
maintaining Town Lake.
Even though development is slower
than anticipated, Tempe Town Lake is
a proven economic engine for the city.
Private investment funds built
nearly 24 acres of condos, high-rise
office and commercial space around
the lake.
And, just announced are plans for
Marina Heights, a $600 million project
touted as the state’s largest office
development, which will include State
Farm Insurance as an anchor tenant.
In addition, according to statistics
maintained by the city, the value
of the lake extends merely beyond
economic to being a place to enjoy and
to promote as a community point of
pride:
• Nearly 5 million people have
attended a special event at Tempe
Town Lake;
• Approximately 890,000 people
have visited Tempe Center for the Arts;
• More than 3,000 have taken a
class at Town Lake such as rowing,
beach yoga or stand-up paddle
boarding.
For more information on Tempe
Town Lake, visit www.tempe.gov/lake.

Posted by on Aug 8 2013. Filed under Local News, Top Story. You can follow any responses to this entry through the RSS 2.0. You can leave a response or trackback to this entry

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