WOODSTOCK – EquityOne Sports Development has to select an underwriter before the McHenry County Board will entertain granting it $15 million in economic stimulus bonds to build a minor-league stadium.
The board’s Finance and Audit Committee tabled action to give the Libertyville company more than half of the $27.5 million of federal bonding authority allocated to the county to jump-start the local economy by funding shovel-ready projects.
EquityOne owner Mark Houser told the committee that he had narrowed it down to two banks, but Committee Chairman Marc Munaretto, R-Algonquin, said that one had to be lined up in writing before the bond process could move forward. The committee will revisit the request at its Sept. 22 meeting.
“I think what this committee wants to know is that there’s an investment banker or lender who has signed on with you. It sounds like you’re still in the competitive stage,” Munaretto said.
McHenry County received the bonding authority under the $789 billion American Reinvestment and Recovery Act. The bonds are supposed to encourage lending by giving investors a 45 percent refund of the federal taxes payable on them. Because the bonds are federally backed, the county is not liable if the borrower defaults.
The bonds are not like the borrowing plan proposed several years ago for EquityOne to build the stadium at McHenry County College as part of a Health, Wellness and Athletics Complex. The college would have used its own bonding authority, with the anticipation that the complex’s revenues would pay off the bonds. Taxpayers would have been responsible for making up the difference if the revenues fell short.
Houser said after the meeting that the federal stimulus bonds were just a mechanism to help secure a lender. He said he hopes to break ground next March, with the stadium ready for the McHenry County K-Nines 2011 baseball season. Houser estimated that investors would see a 9 percent rate of return in the first year.
“This is a totally private project,” Houser said. “We already have the land. All we need is the funding in place and we’ll be on the way.”
Plans call for a 37,000-square-foot multipurpose stadium on 38 acres at Route 14 and Lake Shore Drive in Woodstock. Besides the county minor league baseball team, the artificial turf stadium could be used for other sports, concerts and other events. The stadium would hold about 6,500 people for sporting events and 10,000 spectators for concerts, according to EquityOne’s bond request.
EquityOne’s application states that the stadium would generate $1.65 million of local spending in its first year, create 200 construction jobs and 60 permanent jobs to operate it. But some opponents said they weren’t sold on the idea.
McHenry resident Steve Stanek, a research fellow at the Heartland Institute, said the number and type of stadium jobs did not justify the county granting EquityOne more than half of the economic recovery bonds. He said that other businesses in the county could create more and better jobs with the amount.
Stanek also questioned the concept that county government or taxpayers would not suffer should the borrower default. Stanek said he was speaking for himself and not the institute, a Chicago-based economic think tank.
“It seems to me ludicrous to say that the county can help an outfit borrow money, have that outfit default on the loan, and have the county come out smelling like a rose,” Stanek said. “How many times are we going to be told by state, federal and local governments that there’s no risk to taxpayers, only to find out that there is?”
The McHenry County Board received the authority to allocate $18.3 million in bonding authority for government projects as well, for a total of $45.8 million. The board has allocated most of the bonding set aside for governments, but EquityOne’s request was the first it received for private-sector projects.