The proposal would guarantee the school system $118,000 in stadium revenue the first year with 1 percent increases each year thereafter before any funding went to the city to retire the bond debt.
The Board of Education reviewed the proposed memorandum of understanding (MOU) between Kingsport City Schools and the city at its work session Thursday night.
Superintendent Lyle Ailshie said the document is “making it clear exactly what the school system role was” in the stadium project city officials hope can be done for $4.2 million.
However, Ailshie told the board a “not to exceed” contract bid opening earlier this week came in with two higher bids, although “value engineering” could bring both down.
“It’s probably in the range of $4.75 (million) to $5.1 (million) right now, “Ailshie said.
He said the project likely needs to go forward quickly or go a different route because being discussed and studied for so long likely is reducing interest among contractors.
BOE members Andy King and Randy Montgomery said they supported revisiting the agreement after a few years, and Ailshie said he would insert a five-year review clause in the next draft.
Montgomery said in six to eight years the system likely will have to spend about $1 million to replace the stadium’s artificial football and baseball turf.
After “four or five revisions,” Ailshie said the document also would:
•Make sure both parties understand revenue “passed along with seating” goes for retiring the debt for extra seats and dressing rooms, not Americans with Disabilities Act and safety issues addressed in the existing stadium.
Ailshie said the cost of the project is split roughly 60 percent ADA/safety issues and 40 percent additional seating, dressing rooms and other amenities.
Ailshie said that might work out to $2.4 to $2.8 million for ADA and safety issues and $1.7 to about $2 million for the rest, depending on the overall cost and final details.
•Give no guaranteed annual amount for bond retirement but outlines a process and formula, with an example, for revenue to be passed on to the city. The sample scenario given was as follows:
“3,000 Season tickets times $40 per ticket = $120,000
“600 Priority tickets times $175 ($100 fee + $75 season ticket) = $105,000
“900 Upper deck seats time $75 = $67,500
“Total Season Ticket Revenue Generated = $292,500 (Year One)
School System Guarantee = $118,000 (Year One)
“Net Available for stadium funding = $174,500”
Other points of the proposed MOU:
•Count only season tickets toward debt-reducing revenues, not general admission ticket sales Ailshie said might go down. General admission prices would go up by $1 a ticket.
•A “Pick a Seat” program would allow displaced season ticket holders to pay $100 to pick seats elsewhere in the football stadium, but only the first year.
•Increased concession stand revenue would not go toward the debt retirement. In addition, extra revenue beyond what is needed to retire debt would be set aside for use in future years, when revenue might be lower, Ailshie said.
“I have not at this point shared this with the city,” Ailshie said of the four-page draft MOU presented to the BOE.
“Is there a Plan B if Mr. Campbell (City Manager John Campbell) rejects this?” King asked. Ailshie replied, “Not at this point.”
Ailshie said the school system Activities Committee would have an active role in the stadium management. He also said the Kingsport Convention and Visitors Bureau and Fun Fest officials are interested in being “contributing partners” but that separate agreements likely would occur between those two entities and either the city or the school system.
FOR THE WEB The text of the draft MOU is available at http://kingsport.schoolfusion.us/modules/groups/homepagefiles/cms/940474/File/BOE%20Meeting%20Notes/2013%20Supporting%20Documents/8-15-13%20J.%20Fred%20Johnson%20Stadium%20MOU%20with%20City%20of%20Kingsport%20-%20August%202013.pdf. CAN WE PUT THIS ON OUR WEB SITE AS A PDF?