Extraco Events Center proposal (copy)

This rendering shows proposed improvements and expansion of the Extraco Events Center, which Extraco President Wes Allison says amounts to a re-imagining of the entire 60-acre site: “And we just dreamed.”

Extraco Events Center image

Saturday’s county-wide election will decide whether local officials pursue a plan to significantly and strategically expand and improve Extraco Events Center facilities as well as city of Waco and Waco Independent School District facilities contiguous to them, all in the name of bolstering economic impact. The proposed $34.4 million expansion focuses on repositioning Extraco Events Center to more aggressively pursue events and shows, including highly competitive, high-dollar equine events as well as new trends in athletics, including basketball and volleyball.

Built on a series of proposed land swaps involving the county, city and school district, this intricate, ambitious project encompasses everything from the city’s Lake Air Little League fields to Waco ISD’s Paul Tyson Field, all of which would be improved. But the highlights pivot on a $14 million, 80,000-square-foot, state-of-the-art multi-purpose building and the addition of 300 more horse and livestock stalls (for more than 1,000 total). Proponents cite a Baylor University study that suggests the expansion would increase economic impact from $47 million a year up to $60 million. It all would be funded by a tax surcharge of 2 percent on hotel and motel stays, 5 percent on car rentals. The idea is the tax would fall primarily on visitors to the Waco area. County officials plan to use local contractors and subcontractors. Discussing the proposal in this Q&A: Wes Allison, president and CEO of Extraco Events Center; McLennan County Judge Scott Felton (the county owns Extraco facilities); Mayor Kyle Deaver; and Waco ISD Superintendent Bonny Cain.

Q This election is about bringing Extraco Events Center into the 21st century so we can compete with other counties in the Southwest and bolster our economic potential.

Wes Allison

You’re talking about a game-changer in our business with this model. We don’t know of another single facility, at least in the state of Texas and probably in the Southwest, that will have the type of sports activities going on, with the type of equine activities we will have going on, under one complex. And being that one and only is cool. It’s always fun to be the first one. If you go back and read the history books, the largest coliseum west of the Mississippi was the Heart O’ Texas Coliseum when it was originally built [in 1953]. And to add to our equine opportunities and be able to go after things like the Texas High School [Rodeo] Finals, being able to have that competitive edge.... The fastest growing competitive sport in the United States right now is girls volleyball, age 14 and under. That’s every weekend, all over this country, and you’re talking about 10 girls on a team on average, plus moms, dads, grandpas, grandmas, little brothers, little sisters. We hosted one in February. There were 40 teams. Of those 40 teams, four were from McLennan County. The other 36 were from — well, the closest was from Georgetown. The rest came from Austin, Houston, San Antonio, Dallas, Fort Worth and out west. So we have a real opportunity to create economic impact in that regard.

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Q How many events have you done in the past year?

Allison We average about 125 events a year. Those range from meetings to the Heart O’ Texas Fair & Rodeo. That’s a good yearly average. We’re fully booked. On the horse show side, we do those 48 of 52 weeks a year. The only weekend we will not rent the facilities is between Christmas and New Year’s because that’s the only time I give the staff off. Now there are weekends in a year when we might not have a horse show. We had one that left and that’s typical in the horse show world — they’re going to stay a while, then move. We have others that have been here for years and years. We have about 200,000 in attendance [for events and shows] in an average year, not counting the fair and rodeo, which is another 200,000, so you can say we have about 400,000 to 450,000 in average attendance [at the fairgrounds].

Q Who are your biggest competitors across the state?

Allison The biggest facility would be Fort Worth from an equine standpoint and the Will Rogers Memorial Center. They’re the biggest dog in the hunt. They have 2,500 horse stalls, four arenas. Then you start going down to folks like Abilene, us, Katy, Amarillo — that’s the next group. Tyler has an outdoor facility that gets used a lot. San Angelo has a facility, just not as big.

Q Judge, you and I were talking of misperceptions about Extraco Events Center and the county.

Scott Felton We [through the McLennan County Commissioners Court] fund out of the general fund any capital improvements or capital replacements. The roofing situation [at Extraco Events Center] has gotten quite expensive and we didn’t float a bond for that, we just paid for it. The chillers — that was a big cost that we funded.

Allison Our budget [at Extraco Events Center] is based on the events we do, just like any business. The important thing is we manage a $20 million asset that belongs to McLennan County. It’s not ours. We lease that facility. The county is a great landlord, helping us provide that asset. We’re responsible for maintaining all kinds of things and [basic] upkeep. And when there are opportunities for capital improvements, the county can help us if they choose to.

Felton We [county government] agreed to allow $100,000 a year from the county budget to be put into capital improvements. Our motive is to give [the events center] a competitive advantage: “Don’t worry so much about operations, worry about going out and making sales and making sure you’re self-sufficient.” Many similar operations [in other venues] — not only the capital improvements and renovations but the whole operating budgets are covered by the municipalities or the counties.

Q I can imagine some folks saying, “Well, then, they ought to be able to pay for this without some tax.”

Felton I’d tell them, “It’s already paying for itself.” And it is. If you figure the economic impact and the pleasure and entertainment it brings back to this community, it is paying for itself. The commissioners court has been happy to make sure the organization that is also our tenant has a competitive advantage to operate and keep operating as they’re doing now, including [awarding local] scholarships and those things.

Q Say this venue tax passes and bonds are approved [to initially fund construction] and that puts some $30 million into this 60-acre expansion, including renovation of Extraco Events Center. What if the venue tax doesn’t raise that much money to cover the expense?

Felton Figuring out a consistent source of revenue that provides a sustainable future for the growth of this area has been a challenge for at least 20 years. There were times when we started to move in such a direction [in terms of expansion and improvements] and then the economy would turn bad. So all of a sudden the cards lately looked like they were right to be doing something with all the success in our community and all the things happening. The venue tax is designated to benefit a certain area measured by metes and bounds. For instance, with Waco Independent School District contiguous to us, there’s a football field that’s getting a little older and could maybe be better utilized by the fair. Then maybe WISD could get assets in yet another spot [nearby]. So you get into a friendly horse trade [at the root of this collaboration between the county, fair board, city of Waco and Waco ISD]. The city’s Little League field’s being contiguous is another opportunity for a deal. So a year and a half ago, we started meeting at the top level — the mayor, city manager, superintendent, school board president, me and Wes.

Q So let’s talk about the financing part of all this. I mean, you’ll have money coming in from this venue tax if it’s passed, but you [the county] will issue bonds [to actually fund construction, which the tax revenue would then cover].

Felton It could be that all this is done in phases. I don’t know the answer to that yet. The way we look at it is how much debt will the current revenue stream amortize over a reasonable length of time. As Wes mentioned earlier [about the hotel revenue growth rate], from 2007 to 2015 it grew at 5.5 percent per year. In the worst year, it went down 3 percent but the best year was around 17 percent. Now 2016 is going to be big and it appears 2017 is off to a running start. So we want to develop a revenue stream [capitalizing on this trend] and then the people who underwrite the bonds are going to be looking at measuring the risk factors. The risk is whether people quit coming to Waco or something like that. So we establish an amount. It appears, from a quick look at 30 years, that $25 million to $28 million would be possible depending on the rate. But remember — that revenue trend line is still going up. We generate more revenue after we service the debt, we make our debt payment and we have more money coming in than what we need for debt service. That extra money is put aside and is used as cash to keep the [construction and renovation] phases going or leverage that additional revenue for more capital investment. The people who underwrite the bonds should feel comfortable that there is a reliable stream of revenues to service the debt

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There are some creative things in bond financing. One of our advisers thinks we could possibly do the whole thing the first year out. But we’re thinking we might have to do a couple of phases to get it all done. Right now, construction phase priorities are a big discussion to determine what you build first. Remember, the multi-purpose center is about half the amount at around $14 million.

Q Mayor, what is your perspective on the strengths in all this?

Kyle Deaver For the city, the swap makes sense. We end up with a new Little League complex and hopefully we end up with a park and walking trails through the complex that help the quality of life for all our citizens. This is a collaboration unlike anything we’ve seen between these entities in my lifetime. The most exciting part is the economic development through tourism, our ability to attract more shows, more sporting events, that we can’t attract now. We’ve talked about how this facility interfaces with the city convention center and that we’re really not even competing for the same types of shows. But being able to present different options to companies and trade shows will continue to bring opportunity.

Q How much revenue does Extraco Events Center generate a year?

Allison Of the events center itself, it’s about $2.5 million. On the fair side, another $2.5 million. So altogether we’re a $5 million company. If you go back to when I first came here [in 2002], about 70 percent of revenue was generated during those 10 days in October [during the local fair and rodeo]. The fair was a big deal. If we lost it, that was a major hurt. Through a lot of good financial planning and guys like Scott who have served on that [fair] board, we’ve been able to move that balance and now it’s 50-50.

Q We published a letter from Peter Kultgen [of Bird-Kultgen Ford] very politely suggesting that anyone who rents a car locally might think twice about all this. For instance, if you take your car in to be serviced and rent a car, you too will pay this so-called “traveler’s tax.”

Allison He and I visited the other day and had a great conversation. And I think a lot of this gets back to misinformation. I mean, you can say the same thing about a hotel. If my house gets fumigated, where am I going to stay? Sure, I might ultimately pay that 2 percent at some point in my life too. But then if I’m talking about $100 for a room, I’m talking about two bucks. We’re not talking about a great amount of money here. Now I can’t verify what Peter’s saying about 75 percent [of local car rentals involve people who live in McLennan County]. I would never venture to guess that. But you have a lot of folks who fly in here just to rent a car and drive over to Magnolia. I have friends who run The Findery and they talk about that all the time — people fly in here, rent a car, go shopping, then return to the airport and leave. That’s a change in our community as well. And, normally, when I take my vehicle in to be serviced, there’s a loaner or a ride or something. Normally I don’t rent a car.

Q Now we have a hotel tax already, don’t we?

Allison Yes, it’s 13 percent and so this is on top of that. But if you look at Bell County, they’re at 15 percent. Look at Taylor County, they’re at 15, Amarillo is at 15, Arlington is at 17, Houston is at 17. There’s no competitive disadvantage from a hotelier’s standpoint or even from a convention center standpoint. You’re not going to pay more here in taxes than you will in, say, Bell County or in Amarillo or Abilene or somewhere else. We’re only catching up, if you will.

Q Many visitors are more concerned about facilities they’ll be using.

Felton We’ve had conversations with the hotel people.

Allison And they want to know that we’re bringing people to town. The hotel association is a wonderful group and they’ve been very supportive.

Interview conducted by staff writer Cassie L. Smith and opinion editor Bill Whitaker. Condensed and edited.