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Some Amherst officials say refinancing the Pepsi Center last week solved the four-rink ice arena's financial problems, but critics say it shows how poorly the financing was handled in the first place.

The town will save $1.66 million over the life of the loan, but not from a drop in interest rates, the reason people normally refinance.

Interest rates dropped only 0.06 percentage point to 5.49 percent, said Michael J. Neumeister, the town's financial adviser. That decrease saved the town about $94,000 -- not even enough to cover the refinancing fees, which totaled $110,000.

Virtually all the savings come from Amherst's taking title of the rink away from the Amherst Industrial Development Agency.

The transfer allowed the project to get rid of a letter of credit -- a type of insurance against defaulting that the development agency needed but the town doesn't because of its higher credit rating.

The town could not have refinanced without taking ownership.

Under the new financing agreement, the cost of the $18.6 million Pepsi Center -- with principal and interest -- will total $35.3 million over the life of the 25-year loan. The previous total had been $37 million, also over 25 years.

The refinancing -- combined with recent changes to boost revenues at the shops and restaurant and to book more ice time -- puts the facility back on track financially, said Supervisor Susan J. Grelick, a Democrat.

"It basically was the best decision we ever made," she said. "It's exactly what we had hoped we would save."

The town opted to refinance the Pepsi Center after the rink ran into financial problems earlier this year.

With revenues coming in lower than anticipated and expenses coming in higher, the rink would have been hundreds of thousands of dollars short on its next payment.

But critics say the need to refinance after being open only a year shows how poorly the deal was put together in the first place.

"I think anybody who ever bought a home knows that if you have to refinance it after a year, you've made a big mistake," said Thomas A. Loughran, a former Republican Town Council Member and outspoken critic of the center's financing.

"If they didn't refinance, the project would be a bust," he added. "For (Grelick) to call this a roaring success and say we've saved money is a spin."

And Council Member William L. Kindel a Republican, is questioning whether the refinancing has fixed the center's financial woes permanently or only temporarily. The refinancing cuts the center's annual payments by $40,000 and postpones the first principal payment until 2000 -- three years after taking out the initial loan.

"They bought a little time," Kindel said. "Now the wolf's not at the door anymore. They're still in trouble. It's too bad. It didn't have to be this way."

Kindel and Loughran also argue the refinancing makes it apparent that the town should have owned the Pepsi Center in the first place. Instead, the Amherst Industrial Development Agency held the title to get around laws requiring the project be put up for a public bid.

Grelick said not having to go out to public bid allowed the project to get under way sooner and reduced construction costs.

But critics have pointed to a similar four-rink ice arena in Monroe County that cost $6 million less.

On top of that, a few weeks after the Amherst Pepsi Center financial arrangement was finalized, the State Legislature closed a loophole and explicitly barred industrial development agencies from financing municipal recreation projects. That change forced the town to assume ownership if it wanted to refinance, said James J. Allen, executive director of the development agency.

Assuming ownership allowed Amherst to eliminate a $2.6 million letter of credit in the original project. But it only saved the town $1.66 million because of fees, Internal Revenue Service regulations and other reasons, officials said.

The bottom line, Grelick said, is "we're saving money any way we can."

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