A feasibility study shows a new indoors sports complex would generate millions of dollars for Janesville each year, including about $10.5 million for hotel stays, meals at restaurants, shopping and entertainment.
That sounds great, but before Janesville can reap these benefits, city officials must figure out how to pay for the complex’s construction.
Finding the money might be trickier than initially believed, judging from officials’ comments at a Wednesday meeting. The project’s estimated $33 million price tag will force the city to get creative and not be shy about asking the private sector for help.
The Janesville Jets, one of the complex’s main users, should be the first stop for city officials seeking larger financial commitments. Jets President Bill McCoshen told city officials Wednesday that his team discussed in 2016 splitting the bill for an $8 million to $12 million complex, but splitting the bill at $33 million isn’t doable.
Perhaps not, but the Jets should consider contributing more than discussed three years ago. A $33 million facility likely would generate more ticket sales revenue for the team than thought possible with an $8 million to $12 million facility.
Second, the city should consider securing a capital contribution from RockStep Capital, which owns the mall and arguably stands to benefit the most from the sports complex plan.
The plan commission has recommended placing the complex at the Janesville Mall, and the mall is offering the site for free to the city. We take the mall’s offer as a sign the mall would profit substantially from the arrangement, and the feasibility study released in January reinforces the point. It estimates the complex would create $5.5 million in spending on restaurants/meals, $740,000 on entertainment/leisure and $1.3 on retail/shopping each year. This is the kind of spending people do at malls, and officials should assume the Janesville Mall would get a large chunk of that money as the complex’s users migrate into the mall from sport events and practices at the complex.
Another though less daunting challenge for the city is to demonstrate to taxpayers that it can operate the complex without losing too much money. A Johnson Group study projects the complex to lose money in the first five years of operation ($93,686 in the first year and $10,447 by the fifth), while the original feasibility study projected four years of losses.
These losses would be manageable because the Janesville Area Convention and Visitors Bureau has committed to contributing 10% of its room tax revenue to help cover an operations deficit for at least 10 years. There’s also some consolation in knowing the current Janesville Ice Arena already loses money, about $42,000 each year on average, which taxpayer must cover.
By far, the city’s toughest task in the coming months will be to persuade taxpayers and their representatives on the city council to take on debt to finance the complex’s construction. The city’s case will get only stronger by raising more private sector money to finance the construction. A 50-50, private-public split might be too ambitious, but the city should get close to that mark, or it will need to consider a plan B involving a much cheaper complex.