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Pinnacle Bank Arena

Pinnacle Bank Arena when the light sculpture outside was going up in 2016.

West Haymarket Joint Public Agency members don’t like their support of the Pinnacle Bank Arena budget to be called a subsidy.

It’s more like a family sharing the wealth.

The West Haymarket JPA, the group that oversaw construction of the arena and will be paying off $353 million in bonds, has plenty of money.

And when the JPA shares some of that money with arena operations -- a separate legal entity that runs the arena itself -- that should not be considered a subsidy, said Tim Clare, a University of Nebraska regent who is one of the three members on the JPA board.

When city leaders created the West Haymarket development, they intentionally gave the JPA a very large portion of arena-related revenue. That revenue structure kept the bond interest low, said Tom Lorenz, arena manager. It was intended to ensure that no property tax dollars would ever be needed to repay bonds.

Because of that decision, the JPA is getting about $5.9 million in money each year that is directly tied to the arena itself, explained city finance manager Brandon Kauffman.

That $5.9 million includes all the rent from UNL, which uses the arena for basketball; the income from premium seats; from advertising contracts in the arena; from some of the parking.

In other communities, at least some of that money goes to the arena operations.

The JPA has been handing over some of that money to arena operations every year. This year it will be about $1.9 million. Newspaper stories and others have called it a subsidy.

That’s an unfair characterization, according to Clare, who represents the university on the JPA.

The total project -- the JPA and arena operations -- should be looked at together. And the total project is financially stable, he pointed out.

No property taxes and no city sales taxes are going into either the JPA or the arena operations budgets, Kauffman noted during a meeting last week when the JPA approved its annual budget.

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The distribution of revenue -- between the JPA and the arena operations -- was intentionally lopsided, officials say.

“We wanted to have the money come to the JPA because that is who has the ultimate obligation for the bonds,” Clare said. “We wanted to have SMG (the company managing the arena) as close to break-even as possible."

So this isn’t really a subsidy, but money that would normally have come to the arena, he said.

The city controls both groups. The city has two members on the three-member JPA and the city operates the arena under a contract with SMG.

Today, this is a very happy family with plenty of money to go around. The situation could change when the city begins paying off the principle of the bonds in the 2020s, '30s and '40s.

But computer projections continue to indicate there will be enough money in those future years for both the bond payments and the not-a-subsidy help to the arena, according to Kauffman.


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