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Wednesday, October 29, 2008

Report Favorable on Arena

By Dan McKay
Journal Staff Writer
       Albuquerque's young, growing population looks strong enough to support a Downtown event center, according to a new consultant's report.
    And if City Hall opts to build one, the WNBA has interest in awarding a team to the Duke City, the study said. The league would want a local ownership group willing to pay a $10 million expansion fee.
    The remaining wild card for the whole project, of course, is the tight economy that's squeezing government revenue.
    "In terms of an opportune time to make an investment, if anyone's liquid enough, these are great times," Mayor Martin Chávez said. "What we have to be cautious about ... is that it doesn't impede our ability to provide basic services."
    One hurdle is whether the market will support an 11,000-seat event center. The new report by Convention, Sports & Leisure International says the market characteristics are "very favorable."
    The report was conducted as part of a series of studies examining the feasibility of a $400 million plan to build an event center and hotel in Downtown Albuquerque, near the Convention Center and railroad tracks. The mayor and council haven't decided whether to go forward with the project.
    The city has hired a development group to look into the feasibility of the project, which in turn hired CSL for the market study.
    The market area ­ — defined as the area within 25 miles of the proposed site — has a population of about 783,000, the CSL report said, which is in line with other markets building event centers since 1998.
    The growth rate here is higher than the national average, the median age is younger and household income is "well above average" in the "primary market" area, the study said. It noted that the Albuquerque-Santa Fe area's household income of $47,510 trails the average for markets with new arenas, which had incomes of about $52,000.
    The Census Bureau also estimates that household incomes in Albuquerque's metropolitan area trail the U.S. average.
    Altogether, the event center could probably host about 129 concerts, performances, graduations, games and other events a year and draw 492,000 paid admissions, the report said.
    The WNBA "would be very interested in awarding an expansion franchise" to Albuquerque in 2011 or 2012 if there's an event center with capacity for 10,000 people, plus luxury suites, the report said. The league would need a local ownership group willing to pay a one-time expansion fee of $10 million.
    Councilor Ken Sanchez said that, based on the study, he thinks the event center is "viable."
    "Albuquerque has always been a basketball town," Sanchez said of the possible WNBA team.
    Councilor Debbie O'Malley said she and other officials are discussing whether the economy would affect the project. Councilors, for example, are weighing whether it's a good time to ask people to raise taxes for the event center, which is one of the possible funding schemes. On the other hand, the city might want to be ready with a new event center when the economy turns around in a few years, she said.
    "We already are in the tourist business," she said. "It makes sense to invest."
    Rio Rancho has struggled with its new arena. The city sold $36 million in bonds to build a 6,500-seat venue. The center has had a string of canceled events and lost more than $580,000 since it opened in 2006. Rio Rancho has used more than $1.6 million in gross receipts revenues to help cover the bond payments.
    Albuquerque's event center would be bigger, and supporters say its Downtown location near the Rail Runner would help it succeed.
    Gary Sapp, who is part of the private development team, said it's premature to say what impact the economy would have on the project. "We're going through a deliberate process ... to assess the big picture and details," he said.
    Councilor Isaac Benton said the tight economy might result in higher interest rates if the city borrows money through the bond market.
    Chávez said the slow economy might enable the city to get a better price on building the event center. The city administration is considering whether it makes sense to request new bids on parts or all of the project.
    He said he believes the favorable analysis by CSL is accurate.
    "We are a growing city," Chávez said. "Either we do it, or sovereign nations to the north and south will do it."
    More studies are expected to be released next month. They are being posted at abqfuture.com — click on "project plan."