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 The pro forma assumes that SCS will lease the site from 4J for the first two years for $70,000 per year. After two years, the pro forma assumes the net cost of the lease will be $30,000 ($70,000 payment to 4J, less $40,000 rent from another entity subleasing the northern portion of the site). Those expenses, plus the other expenses and revenues, SCS believes, will produce net operating income of $527,000 (first year of full operation). The pro forma does not include any funds to pay the $22 million that SCS estimates it will cost to construct the improvements at Civic Stadium, or for debt service on that amount. The proposal assumes that the development costs will be paid for by donations, grants, possibly loans, or maybe a City-issued GO bond. For a point of reference, a $10 million bond or loan at five percent interest, repaid over 20 years, would cost approximately $800,000 per year.  The estimated $22 million development cost excludes any funds to address parking or traffic issues.  The pro forma estimates that the expenses during the first two years – before there are any revenues from a soccer team or other use of the site – total approximately $1.2 million. The pro forma assumes that those costs will be paid for by donations and possibly grant funds.  The pro forma assumes that $325,000 will be raised each year through the sale of approximately 215 Club Memberships at $1,500 each.  The pro forma makes assumptions about the number of concerts and other non-soccer related events that would bring in revenue. Absent a feasibility and marketing study, staff cannot evaluate whether those assumptions are reasonable. Absent such a study, it also is difficult to evaluate the extent to which SCS’ proposal would compete with City-owned venues, such as Cuthbert or the Hult Center, and what effect that might have on the City’s budget. During this work session, the council should answer the following questions: Should the City join with SCS and commit financial resources to make the SCS proposal more competitive? If so: What is the dollar limit on what the council will commit? o Where will those funds come from? During the last Budget Committee meeting, the City o Manager and finance staff explained about the current and on-going projected gap in the general fund. Any funds for Civic will need to come from an as-yet-unidentified, new revenue source, or the council will need to identify services that are currently provided that would be reduced or eliminated. RELATED CITY POLICIES Growth Management Policies Effective Accountable Municipal Government: A government that works openly, collaboratively and fairly with the community to achieve measurable and positive outcomes and provide effective, efficient services COUNCIL OPTIONS The April 13 PowerPoint on Civic Stadium suggested a possible revised 4J proposal as follows: City joins with Save Civic Stadium Two-year lease with automatic long-term extension if development milestones are met \\Cesrv500\cc support\CMO\2011 Council Agendas\M110509\S110509A.doc