SPTE 203 Chapter 3 Construction & Finance
SPTE 203 Chapter 3 Construction & Finance SPTE 203 001
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This 4 page Class Notes was uploaded by Rachel Lightner on Saturday October 1, 2016. The Class Notes belongs to SPTE 203 001 at University of South Carolina taught by Professor Jeralds in Fall 2016. Since its upload, it has received 2 views. For similar materials see Introduction to Events and Venues in SPTE - Sport & Entertnmnt Mgmt at University of South Carolina.
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Date Created: 10/01/16
CHAPTER 3: CONSTRUCTION AND FINANCE PLANNING, DESIGN, AND CONSTRUCTION Importance of sport and entertainment venues Impact quality of life for community May require large financial commitment Concern that stakeholders are represented KEY STAKEHOLDERS - New venues need support of Internal and External Stakeholders Internal o Employees, Contractors, Vendors, and Board Members External o Politicians, Media, Business Executives FACILITY PLANNING/ FINANCE COMMITTEE - Who should be included on a facility finance committee? A variety of qualified stakeholders Accounting, legal, debt financing, architecture, construction, government affairs, lawyers OTHER EVENT STAKEHOLDERS Employees Sponsors Artist Representatives Vendors Contractors FEASIBILITY STUDY What is Feasibility Study? o Remodel Current Facility or Build New One o Types of Facility Community Wants- Including Size o What Community Can Afford and How To Pay For It How The Facility Will Be Used? What Are Major Considerations? o Facility’s short and long term goals o Sports and other activities in the facility How Can Acquiring The Land Necessary To Construct The Facility Be A Major Challenge? o Negotiations with several land owners o Use of intermediaries (Middle Men) o Obtain a series of options (gives potential buyers a certain amount of time to commit to purchase of land)/holding fee FACILITY FESTIVAL FRAMES What are the sports facility festival frames? o Festival Frames Parking, Tailgating, Entrances, Concourses o Spectacle Frames Seating or Spectator areas o Behind the Scenes Locker rooms, Offices, Security EMINENT DOMAIN Allows government to take land for public good provided they pay fair compensation o Kelo vs. New London (2005) CONSTRUCTION CONCERNS After acquiring the land the site must be prepared for construction. What are the challenges related to site preparation? o Securing proper zoning A building can only be constructed in an area that conforms to its use o Meeting environmental concerns Ensuring that new construction will not have an adverse effect on the surrounding air, water, and soil o Creating the physical characteristics necessary to build Grading the soil so it is stable, removing trees and other impediments, and establishing the infrastructure for utilities VARIANCE Expectations to law in certain deals/situations THE BEST FACILITY FOR THE BEST PRICE How Can Communities Be Sure They Are Getting The Best Facility For The Best Price? o By soliciting bids from architects and construction companies o Request for Qualifications (RFQ)- Asks for interested architectural companies to submit their qualifications to be evaluated (soliciting bids) o Request for Proposal (RFP)- Request for bids (RFB) Asking potential architects what they would do in their design of the project Additional Cost Related Consideration o Weather trends o Acoustics o Inspections o Availability of materials o Contractor’s financial solvency Additional Concerns of Construction o Preliminary Costs o Funds after construction o Overestimating Contingency fees o Timing of payments o Construction accidents/delays DEBT FINANCING Key things whenever debt financing is utilized: o Any deferred financial obligation should be contemplated with benefits and potential detriments clearly understood. o Items purchased via debt financing should be long lasting and unlikely to quickly lose their value. Ideally, debt financing will be used only when there is a likelihood that the item purchased may actually increase in value. o The repayment of debt obligations should occur BEFORE the item purchased loses its useful life. GOVERNMENT GRANTS -Financing Options o Government grants o Donations TYPES OF DEBT Bonds o Main method involves the issuing of promissory notes General Obligation (GO Bonds) o Issued with the full financial backing of the issuer o Backed up by ad valorem or property taxes o Backed up by organization o Higher bond rating Lower interest rates Revenue o Issued with only the potential financial support of the proposed project o Potential issuers get advice from BOND COUNSEL o Use facility to pay off bonds TIF’s and COP’s o TIF= Tax Increment Financing o COP= Certifies of Participation