Roanoke Rapids City Council Tuesday took steps to restructure its revenue bonds for the financing of the theater — a move which, if approved by the state Local Government Commission, would significantly modify the time the city has to pay off the 2017B revenue bond on the venue.
Council unanimously approved a resolution which supports restructuring the 2017B Music and Entertainment District Special Revenue Bond.
According to the action request form contained in the council agenda packet, “The city and Bank of America are in agreement that the payment terms of the Roanoke Rapids Series 2017B bonds (are) to be changed …”
The proposed changes are:
The bond will bear interest beginning on the effective date at a fixed rate not to exceed 5 percent
The bond will be payable in quarterly installments commencing August 1 with the final payment on May 1, 2032
The bond may be prepaid in whole or part at par on or after the one-year anniversary of the effective date
What the change does, the action request form says, is “allows the city the opportunity to budget and pay 2017B debt service in quarterly installment payments … while also offering prepayment flexibility in the future.”
Finance Director Leigh Etheridge told council the restructuring lowers the fixed interest and gives the city a longer term to pay off the bond.
Councilman Wayne Smith said the proposal would allow the city to make quarterly payments of an estimated $75,000 instead of the current twice-yearly payments of $675,000.
Mayor Emery Doughtie said the modification could put the city in a better position with its fund balance. “I think we have to move on this to explore what else may happen.”
Smith said the option council ultimately approved would “benefit the city and benefit the taxpayers.”
Said Doughtie: “We want to make sure because of the past history that we’re agreeing to do this. This does give us some time to pay this back … if we do this we can breathe a little bit.”
City Manager Joseph Scherer said following the meeting he has not been given any indication thus far on how Senate Bill 105 may play out when state lawmakers reconvene. That bill includes a $7.5 appropriation for theater debt.
He also said he has not received word from the venue’s current owners on what their future intentions might be.
In a statement released following the meeting, Scherer said, “The bond amendment that city council approved tonight is based on the city's opportunity to improve the terms of the 2017B Music and Entertainment District Special Revenue Bond it has with Bank of America.
“It now offers the city a lower fixed interest rate instead of a variable interest rate and a longer term to pay the bond balance.”
Said Scherer: “This change helps the city with our budget planning and forecasting. The bond amendment also provides the city better terms for prepayment options and known costs identification after just one year. It does not increase the bond principal amount. This bond amendment must still be approved by the state Local Government Commission before it goes into effect.”