Leasing arena saves $203K
Published 12:25 am Wednesday, June 24, 2009
If the proposed agreement between local businessman Don Bullard and the county commission to lease the Covington Center Arena is signed, the county will save more than $200,000 annually and eliminate all overhead expenses at the facility, including maintenance and personnel costs.
Bullard’s proposal, which was discussed briefly during Monday’s commission workshop meeting, was one of two received for the arena, county administrator Brenda Petty said.
The other offer, submitted by the city of Andalusia, would have required a $50,000 annual payment by the county to the city in exchange for the city assuming operation of the arena.
In Bullard’s proposal, which was a five-year contract with an option to renew for an additional five years, he agrees to pay the county $1,000 a month and assume all maintenance and operation costs of the facility.
By doing so, the county will save an estimated $203,000 annually, she said.
Petty said each year the county spends $191,050 to operate the arena. This money is appropriated annually from the county’s general fund.
The annual debt service on the building, which is also paid from the county’s general fund, is $228,348. Without a lease agreement, the county spends more than $419,398 on the arena.
By accepting Bullard’s proposal, the county can eliminate its annual operational costs and add an additional $12,000 to the county coffers, bringing the county’s total cost for the arena to $216,348 annually.
If the county had chosen to accept the city’s offer, the net difference in annual savings would have been $141,050 — a $62,000 difference, Petty said.
“What has been discussed is that, if the commission decides to enter into a contract with Mr. Bullard, that money we save — that some $203,000 —we put into the general fund and use it to make the annual debt payment,” Petty said. “If you look at the savings to the general fund, that’s almost the entire payment.”
Petty said monies used to construct the arena were a portion of a bond measure, which is set to be paid in full in 2032.
Commissioners are expected to vote on Bullard’s proposed agreement Thursday at 9:30 a.m.