The second draft of the Dee Amphtheater feasibility study presented to the Washington City Council on Monday had drastically different — and decidedly more negative — net operating income projections.
The first draft obtained by WCBU via Freedom of Information Act request presented estimates for both an outdoor only venue and an indoor/outdoor venue.
The indoor/outdoor version projected a near $1 million loss over the 5,000 seat venue's first two years, but profits thereafter. The outdoor-only flavor had a $132,000 loss in the first year, but posted numbers in the black by the second year.
But the so-called "Draft 2.0" only presents numbers for an outdoor venue. It predicts a first year loss and modest growth in years two through six, but accelerating losses thereafter. By 2035, the development would be expected to lose a net $313,000 a year.
So what changed? According to the project's developers, the Hengst Foundation, it all comes down to who owns the land.
"The income projections were revised due to the City’s plans to potentially sell or lease the land to a private developer," said a representative of the foundation in an email. "Once the land is transferred to the developer, they would be responsible for property taxes which would decrease the projected income for the Project."
Currently, the city owns 223 acres of farmland along U.S. Route 24 and the new Dallas Road. The Hengst Foundation wants to build its amphitheater project on the northeastern corner of the property.
The revised feasibility study prepared by Chicago real estate consultants Hunden Partners said the venue will operate in the red once property taxes kick in. That's expected to happen in 2032, if the amphitheater opens in 2026 as currently expected.
But the developers say the change in property taxes could also benefit Washington's bottom line.
"The economic impact was not reduced but rather increased from the result of property taxes which were not included in the first draft of the report," the Hengst spokesperson said.
That's true, though it's not exactly an apples-to-apples comparison. The second version of the study adds property taxes into the mix with city and county sales and county hotel tax revenues. That means city and county government would collectively be projected to bring in $5.3 million over 10 years from an outdoor only venue.
That's up from the $1.45 million in tax revenues projected over a decade in the first version of the study for a outdoor event complex, which got to that number by adding city and county sales tax revenues together, per a table on page 72.
On Monday, the council was told that the city is expected to earn some $3.8 million in new tax revenue from 2026 to 2034, which would more than cover the $3.5 million the city would need to spend to build out the necessary infrastructure to support the site.
The new study also projects a slightly higher overall economic impact, with $88 million in net new spending and $55 million in net new spending generated by the amphitheater. 101 new jobs would be created, up for 97 in the first study's estimates for an outdoor only venue.
Hunden Partners noted in the first study that an indoor/outdoor amphitheater has higher construction and operating costs, but would also generate more economic impact than a purely outdoor venue.
"With effective management and a strong partnership with the City, Hunden believes the venue could support an increased number of community events to ensure it becomes a transformative asset that enhances the quality of life for residents and strengthens the social fabric of the community," the Hengst Foundation representative wrote in an email.
The city council hasn't taken a vote on the Hengst Foundation proposal yet.
