Advisors present multi-year finance plan tied to casino revenues; council urged to keep $15M reserve

The city's financial advisor presented a multi-year strategic finance plan on June 17 outlining options to fund an estimated $250 million of capital projects tied to revenues from the new Cordish casino. The advisor, David Rose of Davenport & Co., described a conservative approach that centers on (a) preserving an initial $15 million "downturn reserve" from Cordish's guaranteed payments, (b) establishing a $30 million short-term line of credit to provide interim cash flow for pay-as-you-go projects, and (c) borrowing only for roughly two-thirds of the identified projects while paying the remainder in cash as revenues materialize.

Rose said Cordish has negotiated a schedule of guaranteed upfront payments to the city and projected ongoing gaming, meals, lodging and sales-tax revenues that rise over the decade; Davenport modeled sensitivity scenarios that discounted projected ongoing revenues by 25% and by 40% to test fiscal resilience. Under the advisor's base-case assumptions (no revenue discounting), the plan would generate annual surpluses estimated at $6 million to $8 million after operating and debt costs. Under a deep-discount stress test (40% reduction in ongoing revenues), the plan showed an annual shortfall beginning in FY2029 of about $3 million. Rose recommended structuring interim financing so the city does not expend beyond its receipts and to repay short-term borrowing from the guaranteed Cordish payments as they arrive.

On school funding, Rose noted the city has approximately $30 million in education funding available as State Revolving or similar low-interest loans at roughly a 2% fixed rate, which is a separate borrowing source that does not require public-market debt. Rose said he and staff will continue quarterly updates and recommended that the council set aside the first $15 million upon receipt of Cordish's initial payments and only draw on the $30 million line of credit when projects are authorized and funding flows are confirmed.

Council members asked questions about whether a short-term line of credit is consistent with a pay-as-you-go approach and raised past concerns about short-term borrowing. Rose and staff emphasized that the proposal is a cash-flow tool intended to preserve fund balance by keeping an emergency reserve in place; the line would be repaid from guaranteed payments rather than the city's general fund. Council asked for continued quarterly oversight and scheduled more substantive discussion during an August retreat.

The presentation also laid out a stress-testing approach for timelines and operating costs associated with public safety and other services that could grow with casino operations. The overall recommendation was to move cautiously, secure guaranteed payments in the bank before large capital outlays, and structure interim borrowing to be repaid by Cordish revenues rather than by the general fund.