Allegheny County officials work on future loan guarantees to ensure an adequate budget for the new $321-million Pittsburgh Penguins arena.
Allegheny County are setting up the mechanism for funding the new $321-million Pittsburgh Penguins arena, as the county redevelopment authority is expected to vote today on $2.75 million in economic development fund loans.
The money won’t actually be needed until 2010, but the authorization is needed now so the project can proceed. It highlights one of the most important things about arena development: There are a lot of moving parts when it comes to a project like this, and not every part will generate the expected revenue.
Take, for example, the $2.75 million in economic-development loans. Those loans are being backed by three potential sources of income: a Mellon Arena ticket surcharge, interest income from the arena bond issue, and cost savings in construction of an arena parking garage.
None of the three are guaranteed. Funds from the Mellon Arena surcharges are dedicated first and foremost to Mellon Arena; it’s the overage used to pay back the loans. To generate enough money to make an impact on the loans, however, the Pens need to generate their current attendance and make the second round of the playoffs.