Montgomery County Commission scheduled to vote on downtown Clarksville arena in November

In November, the Montgomery County Commission will be confronted with one of the single biggest and most significant spending considerations to ever come before the governing body.

The county will, as has been speculated, take up a resolution in November to fund the design and construction of the downtown Clarksville Multipurpose Events Center.

While the spending cap for this sports-and-entertainment-oriented facility has been quoted often by County Mayor Jim Durrett at $105 million, including the property which is already purchased, the November resolution for approval of general obligation bonds leaves considerably more spending room to cover what Durrett calls "worst-case scenario" indebtedness.

The total amount that commissioners will consider for the bond issue is $130.7 million. The measure passed through the county Budget Committee Tuesday afternoon.

Durrett continues to maintain that his pre-identified-and-calculated designated revenue streams will easily cover the cost of the MPEC without burdening Montgomery County property taxpayers.

Those revenue streams are mostly exclusive to the MPEC and couldn't be generated or used elsewhere, he emphasizes, and include a new funding source — internet sales taxes in Montgomery County.

"The $130.7 million figure ensures that, if we need it, we would have $120 million in cash to build the MPEC," Durrett said. "The additional dollars above the $120 million would be for bond issuance and other costs."

In the days leading up to this week, Durrett has been meeting with commissioners individually to discuss his anticipated funding breakdown for the project.

"In our presentation to the commissioners, we showed a worst-case scenario of the MPEC costing $120 million to build. This figure includes land, design and construction.

"The debt schedule we showed for that scenario includes issuance and other costs. In other words, if it costs $120 million, our funding sources service the debt for the project and all costs associated with issuance of the bond," Durrett said.

In Review:New downtown Clarksville arena: Where the project stands, and what happens next

As the Durrett administration fine-tunes its numbers for spending and revenues to pay off the MPEC, schematic drawings of the facility are expected to be available for view by the end of this month.

Breaking it down

Here's how the proposed $130.7 million bond issue is broken down:

The project fund at $120 million would represent total funds available to build the MPEC and pay off the bond anticipation note.

Also included in the $130.7 million would be the capitalized interest fund at close to $7 million.

Durrett said capitalized interest is a portion of the proceeds of a bond issue that is set aside to pay interest on the securities for a specified period of time.

"Interest is commonly capitalized for the construction period of a revenue-producing project and sometimes for a period thereafter, so that debt service expense does not begin until the project is expected to be operational and producing revenues," Durrett said.

The third consideration within the $130.7 million bond issue would be underwriter and costs of issuance at close to $1.4 million.

"These are the typical costs associated with the issuance of bonds, and like the capitalized interest and project funds, are factored into the debt service," Durrett said.

Reach Jimmy Settle at jimmysettle@theleafchronicle.com or 931-245-0247. To support his work, sign up for a digital subscription to TheLeafChronicle.com.