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Archway’s bankruptcy settled

Archway’s bankruptcy settled

Kearney-based foundation will own attraction after paying settlement

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KEARNEY — Officials of The Great Platte River Road Archway received the decision they were hoping for today (Wednesday) in federal bankruptcy court.

After filing for Chapter 11 protection on March 7, archway officials today learned they must pay a total of $100,000 to settle the more than $20 million that’s owed to bondholders, creditors and vendors.

"Everything turned out exactly as we wanted it to," said Joel Johnson, chair of the Great Platte River Road Archway Foundation. "Our first step will be to get busy and contact the people who pledged money to help us."

In the reorganization plan that archway officials submitted this summer to U.S. Bankruptcy Court for the District of Nebraska, the archway offered to pay vendors $50,000 out of the more than $121,000 owed, and to pay bondholders $50,000 out of the $20 million owed.

Money for the payoffs will come through pledges that Kearney community members made earlier this year to the archway. In all, pledges amounted to $140,000.

The Archway Foundation has two months to collect the pledges and pay the court, which will disburse the funds to creditors.

"It won’t be difficult to collect the money. Those people jumped up to help us," Johnson said.

After paying $100,000 to its vendors and bondholders, the archway will use the remainder of the pledged funds to cover legal expenses associated with the bankruptcy.

Ownership of the archway structure and its grounds then will transfer from bondholders to the Great Platte River Road Archway Foundation.

With bankruptcy now behind them, Johnson said archway supporters will focus on short-term strategies to boost attendance and cover some deferred maintenance. Supporters also will follow through with plans to ask the city of Kearney and Buffalo County for financial support.

Earlier this year, Johnson said the county and city both would be asked to provide $200,000 each per year for the next three years. During that period, a long-term funding and governance strategy for the archway would be developed.

Johnson has suggested that the long-term support for the archway might include a blend of attendance revenue, private donations and public funds.

The bankruptcy filing in March allowed the attraction to remain open and retain nine paid staffers while the archway reorganized its finances and the court sorted out the settlement.

Because of low turnouts in the winter, the archway’s year-to-date attendance of 36,557 through August is less than year-to-date August 2012, at 40,368, putting 2013 attendance on pace to be the least in the archway’s 13-year history.

Although turnstile numbers are off, archway officials said they hope Kearney’s new east Interstate 80 exit one mile east of the archway would ease access to the attraction. The exit opened in late August.

The Nebraska Department of Tourism also installed a kiosk in the archway this summer.

Today’s decision follows years of financial struggle for the archway.

Aside from a pair of windfalls — a hail damage settlement in 2009 and the sale last year of land for the nearby I-80 exit — the archway made little progress in repaying the $22 million in bonds it had owed since a refinancing agreement was struck in 2002.

Under that agreement, the archway’s initial bond debt of about $60 million was reduced to $22 million, which was to be repaid by 2013.

The archway whittled down the $22 million debt using $746,218 from a $1,420,000 hail damage settlement in 2009 and $110,875 from the $423,318 paid for I-80 exit land in 2012 by the Nebraska Department of Roads.

Johnson said in a March interview that the failure of the archway to repay bondholders and other creditors is linked to the attraction’s inability to meet the inflated attendance projections that lured investors to pay $60 million for bonds issued in 1997 before the archway’s construction.

Promoters had predicted 300,000 or more visitors annually.

Attendance was 223,013 in 2000, the archway’s first year. The turnstile count rose to 249,174 in 2001, but has steadily declined. In 2012, the attendance was 49,960.

The archway derived some of its income from admissions. However, since 2006, the Kearney Visitors Bureau has provided $150,000 annually to the archway for a total of $1.2 million.

Proceeds from the local lodging tax provided the archway $1.5 million in seed money to get the project off the ground before the opening in 2000.

Johnson said tight income resulted in delaying maintenance. However, the operation attempted to meet what he termed "essential expenses," such as water and electricity.

Some bills went unpaid.

Prior to today’s settlement decision, Johnson said approaching potential donors was challenging because of the $20 million bond debt. He said the situation might change with the settlement because donations will cover archway needs, not pay off bondholders.

In recent years, archway officials have emphasized educational events such as the Dancers of the Plains powwows. School groups and the public have a variety of opportunities to learn about Nebraska and U.S. heritage through such programs.

This summer, the archway was the gathering point for the 100th anniversary of the Lincoln Highway.

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"Everything turned out exactly as we wanted it to," said Joel Johnson, chair of the Great Platte River Road Archway Foundation. "Our first step will be to get busy and contact the people who pledged money to help us."

Joel Johnson, chair of the Great Platte River Road Archway Foundation

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