Not so long ago, Orlando Mayor Buddy Dyer asked us to look to the many cranes erecting skyscrapers on the city’s skyline as proof that downtown was on the cusp of blossoming.

You don’t hear much of that talk these days.

Lou Pearlman went bankrupt, then to jail. Cameron Kuhn is broke, in foreclosure and walking away from the city-subsidized building and movie theater – which now seems to be off the table – that were supposed to revitalize the downtown core. The 55 West development is an unfinished monument to the real-estate bust of 2007. According to a Feb. 17 Orlando Sentinel story, two-thirds of the more than 40 mid- and high-rise condo developments that have been announced in recent years haven’t been built. Most never will be. The idea that city streets would be filled by young, creative, hip families living in 10,000 downtown condo units, eating in fancy restaurants and shopping at floor-level retail shops, is dead.

News from the tourist industry is also looking glum. Orange County’s tourist tax revenues were down 3.1 percent in December from the same period in 2006. Hotel occupancy dropped 4 percent in December 2007 versus the previous year. Orange County Convention Center bookings plummeted 21 percent in the fourth quarter of 2007.

A recession looms. The dollar is down. Unemployment is up. People are spending less. Gas prices are through the roof. The credit crunch has driven up interest rates and made it more difficult to get loans. Home prices in February 2008 dropped 8.2 percent, which CNN called the “largest year-over-year price drop on record.”

But don’t worry about any of that, say Orlando officials. The $1.8 billion plan (don’t forget interest payments, like the city and the Orlando Sentinel typically do) to build two new downtown venues and renovate a third that almost never gets used is rock-solid. Yes, it’s based on rising property values, increasing tourism and people snapping up downtown condos, but it’s rock-solid nonetheless. And that’s all you need to know.

“We are confident in our financial plan for several reasons,” Rebecca Sutton, the city’s chief financial officer, wrote in an e-mail to Orlando Weekly. “First, it is based on conservative projections of the revenue streams that support it. In addition, it has been reviewed by many financial experts such as insurers, underwriters and rating agencies, who believe the plan is solid.”

Here’s the problem: Those “conservative projections” are based on economic assumptions made during rosier times. “Maybe things won’t be great forever, but they’ll at least be really good” – that’s how city officials sold these venues.

There are some signs that the city is not totally disconnected with reality. It has postponed issuing bonds for the arts center and the Citrus Bowl renovation project. According to city spokeswoman Heather Allebaugh, the city is “months away” from taking out those loans.

That doesn’t mean these two won’t get done; they likely will. But it’s worth pondering, again, just how ethereal the deals to build all three venues really is. And in that sense, the performing arts center is particularly instructive.

The Dr. P. Phillips Performing Arts Center, scheduled to open in 2012, will cost $450 million to launch. Of that, $354 million is for construction, $30 million to buy and prep the land, $41 million to pay for roadwork surrounding the center and $25 million for other start-up costs.

The performing arts center itself has promised to raise at least $96 million of that $450 million through private contributions, and according to executive director Kathy Ramsberger, it has already received $86 million in pledged donations. That leaves $354 million to come from public money. Fifteen million dollars will come from the state. The city will donate land worth $27 million and $20 million from the eventual redevelopment of the Centroplex, the land upon which the Amway Arena and the Bob Carr Performing Arts Centre now sit. The city-run Community Redevelopment Agency, a quasi-governmental board that siphons off property taxes that would otherwise go into city or county coffers to fund downtown renovation projects, will pay $130 million. Another $130 million will come from tourist taxes.

Sounds good so far. But here’s the rub: Neither tourist tax funds nor the CRA has anywhere close to $130 million sitting in the bank. So the plan is for the city to take out bonds – think of it like a mortgage on a house – to cover these amounts.

Of course, when you take out a mortgage for a house the bank wants to know how you intend to repay the money. Same deal with bonds. The CRA intends to pay its $130 million from rising property values downtown in the next three decades. (Remember that its revenue comes from siphoning off a portion of property tax revenue in the downtown core.) If property values stagnate – or depreciate – for a significant length of time, the CRA might not be able to pay off the $130 million. Same with tourist taxes: If the tourists stop coming, the city’s ability to meet its obligations decreases.

(The $175 million Citrus Bowl renovation is funded from the same sources, though it is not as reliant on the CRA. Tourist taxes will pay for $145 million, the CRA will finance $20 million and the Citrus Bowl will receive $10 million from the sale of land that is now the Centroplex.)

Between the performing arts center and the Citrus Bowl, the CRA will have to cover about $11 million in debt payments every year, the city estimates. Another thing to keep in mind: The CRA essentially co-signed the $275 million loan taken out on tourist taxes to pay for the Citrus Bowl and the performing arts center. That means if the tourist tax revenues don’t come through, the CRA is on the hook for that money as well.

City documents released in 2006 and 2007 paint failure of the repayment plan as nearly impossible. That’s because back then more than a dozen major developments, both business and residential, were on the way in downtown Orlando – developments that would bring thousands of new condo and hotel units and more than 1 million square feet of office space to downtown, thus bolstering the CRA’s coffers.

Figures estimating the CRA’s revenue were kept conservative, according to Real Estate Research Consultants, a firm the city hired in 2006. “There are several other major projects which are even more speculative,” the RERC’s report says. RERC predicted that CRA funds would surge, bringing in massive windfalls between 2007 and 2026. Its budget would average between 4.9 percent and 5.2 percent annual growth. The CRA’s annual revenue stream, according to RERC, would double in the next decade, from $18 million to $36 million.

In 2007, things looked to be off to a good start. Last year the CRA netted $19 million, $1 million more than RERC predicted. But one year does not a trend make.

The deal starts to look less foolproof when you consider how much of it hinges on steady-to-rising property values. If property values go down, the city will have a hard time getting the $90 million it wants for the Centroplex land. The performing arts center is banking on $20 million from that sale to pay off bonds (and the Citrus Bowl is counting on another $10 million).

But what developer would spend that kind of money to put up more “mixed-use” buildings – office space, retail and condos – in a market already glutted with it?

Good question, but not one the city is asking. Sutton, the city’s CFO, calls the $90 million price for the Centroplex land “conservative.” City spokeswoman Heather Allebaugh adds, “We don’t have to sell `the Centroplex` for over five years.” Essentially, the city is pinning its hopes on its “bargain” pricing of the land and the idea that things will improve. If you’re a taxpayer in Orlando, you’d better hope they’re right.

Both the performing arts center and the Citrus Bowl face another hurdle. Last September, the Florida Supreme Court ruled in Strand v. Escambia County that cities could not spend “tax-incremental revenues” – exactly what the CRA collects – without a referendum. If the court finalizes that ruling, which is under review, the city will either have to hold a vote or find another way to scrape together the $150 million it can’t spend from CRA revenues.

Educated guess: There will be no referendum. City officials have already made it clear they have no intention of putting the largest capital project in the history of Central Florida to a vote of any kind. “We have talked with our bond counsel and there are alternative options available, but at this time we `are` awaiting the decision of the court,” Sutton says.

Building the performing arts center is only the beginning. Someone – and that someone is the taxpayer – has to pay to keep it open and running.

According to city documents, the performing arts center will run multimillion-dollar operating budget deficits until at least 2019. The city will pick up $1.5 million of that annually, a figure that will increase by 3 percent a year to keep up with inflation. The center’s own fund-raising will also chip in to cover the deficit, to the tune of between $300,000 the first year of operation to $1.1 million in 2019.

But here again, real estate is expected to contribute a big chunk of money to the equation. The city expects the performing arts center to fund its operations by selling some of its city-donated property to developers, who would in turn build – you guessed it – hotels, office towers and residential condos. In the performing art center’s 2006 pro forma, which details funding expectations, the center says that it will take in $300,000 from “residential land sales earnings” in 2010 and 2011; that number will then increase to $900,000 in subsequent years. OPAC (as it was called then) also predicted that it would make as much as $700,000 a year from “commercial development site leases.”

That new construction is also expected to generate new CRA revenue – as much as $3.1 million per year – that would be routed back to the performing arts center to pay operations debt.

This proposal runs into the same problem as the city’s Centroplex redevelopment: In a landscape dotted by the ghosts of gone-bust condo developments, what developer would want to build another 200-room hotel, 400 more condos and 400,000 square feet of office space? Is that even remotely realistic?

According to the people who want to build the performing arts center, it sure is. As Ramsberger puts it, “Even though the economy is in a down cycle, we are confident that the economy will rebound and the DPAC site, as the new civic center of Orlando, will be the most desirable location downtown for the complementary developments planned to surround it.”

If the performing arts center can’t sell the land for as much as it thinks, Sutton says the city won’t be there to help and the center will have to trim expenses.

Although the city hasn’t yet taken out bonds for the performing arts center, it has for the new arena. And already, the volatile municipal credit market has increased costs: Over the 30-year life of the loan, it will have to pay $100 million more than it expected. (The city says that’s not a big deal because it plans to pay off its debts early – but once again, that assumption depends on a thriving tourism market.)

In 2006, the CRA projected a 5 percent interest rate on its $150 million loan. The first CRA bonds were supposed to be issued by April 1, but that didn’t happen due to the instability of the bond market, the possibility of more tax cuts from the state legislature and the Strand case.

But the city casts the bond-market crisis as a minor issue, not even worthy of a response. Sutton dismisses questions about the possibility of increased interest rates as “simply speculation. We will evaluate the best time to take these to market.”

In other words, “Nothing to see here. Move along. We’ve got everything under control.” That’s an increasingly common refrain from City Hall these days.

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