Mobile officials outline $300 million civic center plan and delay lodging-tax change after legal snag

City of Mobile finance and project staff told the City Council on the record that the civic center/arena project remains on schedule and that the total project budget is $300 million, but officials cautioned that near-term debt-service years (2025–26) will be tight and that a proposed lodging-tax amendment must be reworked after a legal issue was identified.

Sam, a representative for engineering firm Volkert, said the construction schedule is moving as planned: “So we are on schedule, with the arena procurement.” He told the council demolition of the civic center is nearly complete and the parking deck is structurally up to the sixth level on the north half and expected to be substantially complete and open in April under the current schedule.

The council received a detailed cost breakdown from the team presenting the bid award. Scott Collins (presenting the bid figures) summarized the contract and related line items and said, “That’s how we arrive at the total $300,000,000, project itself.” Collins described a maximum net construction cost of $218,000,000, alternates totaling $3,207,000, a sprinkler allowance of $200,000, a mural reinstallation allowance of $500,000 and a bidder contingency allowance of $15,000,000 that together produced a maximum contract award of about $237,447,000. He added other direct and soft costs — testing, furniture and equipment, demolition and professional fees — that the presenters aggregated into the $300 million total.

Scott Reynolds, speaking for city finance, walked the council through the funding stack and debt-service model. Reynolds said the financing plan assumes $250,000,000 in bond proceeds, a $15,000,000 commitment labeled in the presentation as “OBG,” about $4,000,005.87 in current project-available funds (including demolition dollars), an expected Mobile County Commission contribution (presenters used $10,000,000 as a cautious placeholder though the original ask had been $15,000,000) and the use of TIF and a small general-fund contribution to make up the balance. Reynolds explained the intended spending order: bonds first, then the OBG commitment, then other internal project funds, with county, TIF and general-fund dollars as last-resort sources.

On contingencies, presenters described two layers: a $15,000,000 contract contingency included in construction line items and an owner contingency of roughly $16,262,782 (about 5.4%), totaling about $31,000,000 in contingency funds. Council members pressed on several estimated line items: construction-materials testing, special inspections and FF&E (furniture, fixtures and equipment) were identified as estimates not yet under separate contract.

Reynolds also presented modeled debt-service effects. He told the council the new civic-center borrowing will produce interest-only payments in 2025 and peak debt service in 2026, noting the city’s existing police-and-fire pension payoff (the presentation showed a large legacy payment that declines after 2027) influences near-term capacity. Reynolds said the financing structure aims to avoid increasing long-term annual debt service relative to legacy debt once older obligations retire, but that the 2025–26 window will require caution when adding new capital projects.

Council members asked about the sources and timing of reimbursements for demolition and other pre-bond expenditures. Reynolds said reimbursements from the bond proceeds are possible during the 24-month construction window but that a reimbursement resolution captures only the previous 60 days of expenditures for recoupment; not all previously spent demolition dollars would be reimbursable at once.

The council also discussed a proposed lodging-tax change and associated TIF (tax-increment financing) treatment that would allocate portions of the lodging-tax revenue to Visit Mobile, airport debt, and civic debt. Jim, a city staffer working on the lodging-tax package, and other staff told the council they had asked to lay over action after finding a legal complication: the district plan petition submitted by hoteliers described a total lodging-tax allocation that differs from the council’s proposed amended ordinance. Jim said amending the lodging-tax allocation as presented could require repeat petitioning of the hoteliers under the district plan process, so staff had paused the amendment and planned to meet with hoteliers and city counsel to seek a legally viable approach.

Mayor (unnamed in the transcript) thanked the council for flexibility in the project and said staff will continue to refine the cash-management approach. Jim and legal staff said they would return to the council with a revised formula and a date certain for reconsideration, and staff said the civic-center bond issuance itself can proceed independent of the lodging-tax decision.

What’s next: staff will return with corrected lodging-tax/TIF language after meeting with hotel representatives and counsel; finance will provide a revised budget model if the lodging-tax allocation changes. Council members were advised to expect tight capital flexibility in 2025–26 and to plan accordingly.