The city planned on using their
standard means of financing for the project, through alternate
bonds. Getting the financing completed by January, as requested by
the developer, was not likely to be possible. The developer said he
would be asking for reimbursement for expenses as work progressed.
He could ask for it all at once or at any time now. Work began last
fall and continues at the site.
A couple of local banks offered
financing, either as a bridge loan until the bond money came through
or for the entire 10 or 15 years needed to pay off the debt.
Projected interest rates on the
alternate bonds are 4.5 percent for 10 years and 4.75 percent for 15
years. Bill Bates, the city attorney, said that depending on which loan period is chosen,
it will take $43,000-$50,000 or $60,000-$67,000 annually to pay the
The loan rates offered through the
banks are not any better than the bond issue, Bates said.
With all of that said, Bates added that
the information to move forward on the bonds with First Midstate is
all in place. However, some of the banks need additional
information. A decision to go with the bonds should make the funds
available by mid-February.
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Because the developer could ask for the
money at any time, Bates pressed the council to make a decision. He
said that considering the offers the banks are making would take
time for both the council and the banks to review the information.
"I'm just not certain we have enough time to do that," he said.
Finance Chairman Verl Prather agreed,
saying that since it would cause further delay to work with the
banks, he felt they should proceed with the alternate revenue bonds
through First Midstate.
Of the proposed $665,000 project,
$155,000 is allocated for a traffic light at the plaza. The light
must be approved by the Department of Transportation. Alternate
funding for it may be found through grants or motor fuel tax. So,
the amount to be borrowed is $510,000.
Alderman Benny Huskins said he would
not approve the ordinance to borrow the money for the project. "I
was against giving this much money up front and I still am," he
said. Alderman David Armbrust agreed.
By a 7-2
vote the council approved borrowing $510,000 for the project through
alternative bonds from First Midstate. Aldermen Huskins and Armbrust
cast the two "no" votes. Alderman Glenn Shelton was absent.