The savings from the deal could jump to $800,000 a year if the Internal Revenue Service allows the city to issue fully tax exempt bonds in its refinancing of its theater debt.
The estimated amount the city will have to pay back is around $12.8 million. Gatling has offered the city $7.1 million for the troubled building in a cash only deal.
Both Hite and Mayor Emery Doughtie say there is nothing to indicate that Gatling will back out of the deal, which city council approved Thursday evening. “He came to the city,” Hite said. “He made the offer to the city.”
Hite said she, city officials and members of city council never believed they were going to be able to sell the theater for its construction cost of $14 million. “Not in today's economy,” she said, stating beforehand, “I feel fortunate the offer represents 50 percent of the construction value.”
Hite said both Bank of America and the Local Government Commission sanctioned the sale of the theater. “Bank and America has agreed to release the property free and clear to Mr. Gatling.”
The city hopes to have an answer back from the IRS by the end of the month on whether it will allow it to issue the 100 percent tax exempt bonds. The current bonds the city issued for the theater are 80 percent variable rate. “That's what is hurting us. We're waiting on the IRS to give us a ruling,” Hite said.
The deal as it stands will save the city $600,000 a year. That figure includes the $100,000 a year the city will save in operating costs.
If the city is allowed to issue the tax exempt bonds then that is a another savings of $200,000.
Meanwhile, Doughtie said this morning he has heard no feedback on the city's decision to sell the theater. “I think the people who were at the meeting, their reaction was positive. It wasn't a real shock we were trying to sell it. We were trying to make the best out of a difficult situation.”
The mayor said had Gatling not given the city an option, council would have to look at a 1 cent to 17 cents tax increase to make the $1.7 million theater payment next year or what he termed as drastic cuts in city services. “If we had no tax increase we would have had to make $1.7 million in cuts. That could mean closing a fire station. We didn't have a lot of other ways other than increasing fees. I'm confident for the long term we made the best decision we could make.”
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Let's see, he backed out of the LAST deal he made with the city, so wouldn't that indicate there is a considerable risk?
And if part of the sweet deal includes dropping a lawsuit, wouldn't that create legal problems for both parties?
I'm not sure that's completely it, there is plenty of feedback on this site and on the facebook page. I do believe that a great majority of the people in this town do not stand up and make themselves heard for reasons such as being job scared if they say something a so-called "muckity-muck" doesn't like. I've actually had this told to me more than a dozen times as why people do not step forward. People also feel like they might as well not waste their time because they are not going to be listened to anyway, or will be belittled for speaking their minds. Obviously not something that worries me, and yes I have had remarkably negative contact because of it. However, I refuse to keep it to myself. Too many good men and women died for this right and I have an obligation to use it.
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