BANGOR – With the opening of Penn National Gaming Inc.’s slots facility less than two months away, councilors began talks Monday night on how best to use the city’s share of the proceeds.

Though members of the council’s finance committee discussed a draft policy for allocating racino revenues, no conclusions were reached. Discussion will continue in two weeks.

Noting that his figures are rough estimates, City Manager Ed Barrett projected that the city would receive $500,000 to $520,000 in revenues from Penn National’s interim facility for 475 slots during this fiscal year, which began July 1. The revenues are projected to increase to $1.3 million the following fiscal year, with yearly totals edging up to $1.7 million by fiscal year 2010, by which time Penn’s permanent facility could be ready.

Once the permanent facility, which would house up to 1,500 slot machines, is completed, revenues would jump to a projected $3.4 million a year, he said.

As it stands, the draft policy calls for establishing a reserve fund for a replacement for the aging Bangor Auditorium. If all goes to plan, design work on the new facility would begin by about 2010 and construction two years later, City Manager Edward Barrett said during the meeting.

In addition, Barrett and Finance Director Debbie Cyr recommended that the council set as priorities:

. Restoring the city’s undesignated fund balance to a healthy level – or 7.5 percent of general fund expenditures – by reimbursing it for legal and lobbying costs related to the racino project. The health of the undesignated fund balance, in effect the city’s rainy day fund, has a bearing on the city’s bond rating, Cyr said.

Cyr said the numbers for last fiscal year are nearly complete and that it appears the fund balance will end up at less than 6 percent, though not only because of racino-related expenses. The biggest withdrawal from the fund, for the last three or four years at least, has been the Penobscot River coal tar cleanup.

. Reimbursing the city’s general fund for operating subsidies to Bass Park, which amount to $1.6 million to $1.9 million over the past 25 to 30 years. Most of the operating losses date back to the years that the city operated harness racing. Racing now is operated by Bangor Historic Track, owned by Penn National.