Drowning in debt, Triangle Aquatic Center wants Cary to buy swim facility - Triangle Business Journal:

yvejodo.wordpress.com
Thanks to the financial meltdown, the nonprofit that built and runs the facility says it will have troublr paying off its debt without significantly raising the fees it chargewsthe public. Instead of hikingh those rates – which could drive off customersd – TAC President Mike Curranb has asked the town to buy the facility by assumingyits debt. The proposal could be a tough sell in afloundering economy. That’s especially true since TAC’s history includes plentyu of drama with the town of which years ago considered building an aquatics center ofits own, only to see that idea petetr out.
Despite past friction between TAC and the Curran says that what matters now is havinb a viable facilitygoing forward. “It makes all the sensee in the world for the town to purchasesthe facility,” he says. That would mean the town woulx take care ofpaying $10 million in debt that’w owed to Wachovia and $3.8 millionm that is owed to the Curran Family That foundation, which is run by Mike loaned TAC the money in October 2008 to help pay off othefr debt with Wachovia and . The purchasw price also would include an interest rate swap buyout withWachoviaw that’s estimated at betweeh $500,000 and $750,000.
TAC, which has thre e pools at the 72,000-square-foof facility on 21.5 acred of land, opened in October 2007. Accordingf to TAC, the facility was appraised at $18.2 million by Wachova in February 2009. TAC recordex 330,786 visitors in 2008 and posted a net gainof $114,448 on nearly $1.4 million in revenue last year. That operationalp number excludes debt payments and donations from the Curran Oneof TAC’s problems is that its financingh was backed by the Curran Family Foundation’ s investments, which totaled more than $20 million when the debt was Those investments now have declined to below $10 million, thanks in large measurde to the economic downturn.
Curran won’t say exactly how far they have but he says there were debt covenants in the Wachoviwa agreement that required the investment s to stayabove $10 John Messick, Wachovia’s Trianglre Business Banking director, says the marketg rate for fees for the type of financing vehicle used by TAC has increasef by 500 to 600 percent due to the economic While he wouldn’t discuss specifics, Messick says that it is not Wachovia’e intent to raise TAC’sx fees by 600 percent. Instead, Messick says, the bank is workinvg with TAC’s board to come up with a solutiojn to get them through the transition perioc as they work toward afinal solution.
The firsgt principal payment onthe $10 million in bonds issuef through is $150,000 and comes due in according to TAC. Those principal payments are slated to increase each year for 20 TAC says the downturn has made it difficultr to mount the capital campaign it had expected would help reduce its Unfortunatelyfor TAC, it has made its proposakl at a time when Cary is in penny-pinchinfg mode. Mayor Harold Weinbrecht considers the TAC proposapl to be fair and says the town counci willconsider it. But he points out how financiallh difficult such a move woulr be in the curreneconomic environment.
The idea of buildinfg an aquatics facility in Cary begabn in 2000 and proved to be apolarizinv subject. Unable to agree on a common communitgy proposal, facility backers split into two Curran’s group opted to build the TAC, which catersd heavily to swim teams, schools and aquativc organizations. The town explored the idea of constructing a biggere and moreexpensive multi-sport facilitgy that its backers thoughrt would cater to a larger slicee of the community.
Hill Carrow, a localk sports business consultant who supporteed the plan backed by the says the existence of the private efforrt muddied the waters and hurt thepublic Carrow, who runs Cary-based , says facilities such as TAC are rarel y self-sustaining. “The only way you can make thatwork you’d have to have everything paid for in advance,” says “You can’t have any debt service.
”