A task force studying possible locations for a new entertainment arena in Lincoln is now stepping back from one of the three finalists: the site of the city’s downtown post office.

In late June, the task force narrowed nine potential arena locations down to three, which are all near the Haymarket District: the site of the post office near Seventh and R streets, west of Lincoln Station in the Haymarket District, or south of Harris Overpass just south of the Haymarket. The Lincoln Station could serve as a front door to an arena, convention center or hotel.

The post office has often emerged as a favorite location, but that may be changing.

“I think we’re probably moving more and more away from the post office site exactly,” said Tom Lorenz, general manager of the Pershing Center and chairman of a subcommittee studying locations.

He said it’s not about the fact that the U.S. Postal Service is considering consolidating Lincoln’s downtown post office with another city’s — which would cause Lincoln to lose hundreds of jobs — even though having to relocate the post office could make construction of a new post office in another city more tempting.

Lorenz said the two other sites are probably “cleaner” and would take less time, but the post office site may still work down the road, particularly if it’s abandoned by the Postal Service anyway.

“That may be a great location for a second or third phase (convention center or hotel),” Lorenz said.

It’s been nearly a year since a task force appointed by Mayor Coleen Seng recommended the city replace the Pershing Center with a new arena with up to 15,000 seats and enlist a private developer to build a hotel and convention center nearby.

After Seng made the group’s recommendations public, the task force was divided into four subcommittees and said it would report back to Seng in late May or early June. They’re a little behind schedule.

The subcommittees are now largely studying the cost of various scenarios.

City Finance Director Don Herz chairs a subcommittee studying ways to pay for the new arena. Herz said the arena could generate money from parking, the lodging tax, naming rights, premium seating, tickets and tax increment financing from the hotel or convention center.

Lincoln leaders will also try again to get legislation passed to allow sales tax revenue from nearby hotels to be used for startup costs, and sales tax revenue from the arena and new businesses in the area to pay off bonds to finance the arena.

As for one-time revenue sources, Herz said he’s looking at something similar to a revenue bond.

“I think what we would like to do is see if we have enough revenue sources that would be sufficient to amortize the cost of a bond issue without having to pay for any of that with property taxes,” he said.

If that’s not feasible, a general obligation bond is possible but would require voter approval.

The committee is also trying to estimate the cost of combining the State Fair and Lancaster Event Center onto one of their two campuses. The task force has talked about a land swap because the University of Nebraska owns several hundred acres of land near the Lancaster Event Center.

Kent Morgan, assistant director of the city-county planning department, is a one-man subcommittee who’s been looking at flood plain, utilities and ground contamination issues near the Haymarket.

“At this point we haven’t found anything that would preclude the development of that site,” he said.

He is working with the city’s stormwater management division on analysis of the flood plain for both the potential arena sites and the State Fair and Event Center sites, in light of possible new regulations for the Salt Creek drainage area the city is working on.

A Kansas City consultant that did flood plain work for the city was also hired to look at the impact of the city’s potential new regulations on basins at the arena sites and co-located State Fair and Event Center sites. Morgan said the consultant was paid about $10,000.

Other than that, everyone else’s time has been donated to the effort to study an arena.

The chairman of the full arena task force, Dick Campbell, said the committee plans to meet again later this month and hopes to have a final report ready for the mayor by October.

Reach Deena Winter at 473-2642 or dwinter@journalstar.com.