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PACC: Is Federal Way ready for this investment? | Letters
As with probably the majority of citizens of Federal Way, I am not extremely educated in the operation of municipalities, so I decided to take a very simplified approach to the Performing Arts and Conference Center (PACC).
This lack of education on municipal processes is not a dig on anyone. I just think it is a way of life for most of the residents of the city.
I used numbers from the PACC website at http://www.federalwaypacc.org/index.html. In doing so, there is a pro forma (annual operations cost versus annual income) estimation in the FAQ section where I took the financial basics. Below is what I determined.
The current estimate for construction of the PACC is approximately $31.5 million. The website shows a total of $13.319 million has already been “raised” for the project. The breakdown of the money raised is also shown on the FAQ section.
That leaves a total of $18.181 million remaining to complete the project. The pro forma also estimates a first year profit of $22,000. Let’s assume the city finances the rest of the project cost at a perfect interest rate of 0 percent and they can pay this out of just profits over an unlimited period of time.
I realize this is never possible, but for simplicity we can use these parameters. In that case, dividing our $18.181 million “loan” by the projected annual profit, it will take us a total of 826 years to pay off the PACC. Thus in year 827, we will start to reap the benefits and feel real profits from the PACC.
So realistically, there may be other benefits to the city by building and operating the PACC, so the return on investment will not really be 826 years in the future.
Depending on how this actually could bring businesses into the area, the city could reap benefits much sooner than expected. But these simple terms can give some of us residents of Federal Way a better look at what we are looking at. Is it really a benefit to us? Maybe the ancillary benefits far outweigh the price, but maybe also these benefits are just projections and will not come to fruition.
Are you ready to make an $18 million investment to see if these benefits will come to the city?
Bill Buchanan, Federal Way