The “reserve fund” does not yet exist. According to the agreement between the LCCCA and Wachovia (now Wells Fargo) drawn up by Stevens & Lee, the reserve fund cannot be created until the official completion of the project, which means all construction contracts must be fulfilled and all outstanding construction bills must be paid.
When the agreements were signed at the end of March 2007, it was assumed that the “integrated facility” would open before the end of March 2009, triggering the agreement to put “hotel tax” money into the reserve fund. Not only was the opening delayed by poor planning during the construction process, as of this writing not all construction contracts have been signed as completed (primarily due to negotiations over additional costs incurred due to the unanticipated delays).
To further complicate the issue, the proposed construction funding plan assumed that excess revenue would accumulate during construction. The problem is, flaws in Cooper-Carry’s construction plans resulted in millions of dollars in cost overruns, putting these plans into disarray.
The LCCCA has already tapped into a special $1 million line of credit which will be used to fund operational losses in the short term. But these funds will need to be repaid. We can expect to see an unavoidable increase in the “hotel tax” within the next year or two.
Without any intervention, it would be necessary to raise the “hotel tax” to the maximum amount allowed by State law at the beginning of 2011. But the LCCCA board now includes four members with exceptional financial experience and knowledge: R.B. Campbell, Larry Hinnenkamp, Patrick Snyder, and Douglas Shand. Their combined expertise might very well go a long way toward postponing the inevitable.
Whether or not they are they are “experts” at anything, let alone financial matters as you suggest is debatable. Either way, they are not magicians and they cannot create dollars where dollars do not already exist.
What happens when the hotel tax is maxed out and we are still short?