It could also result in consideration of cost of living increases for employees, City Manager Joseph Scherer said today.
The city completed the termination of the the 2007 Music and Entertainment District bond package Wednesday and forged a new loan agreement with Bank of America.
Scherer said the city was locked in at a tax exempt interest rate of 2.54 percent , a lower rate than originally quoted.
The 2007 bond package financed the construction of the venue and provided operating capital and operational costs.
In a statement on the matter today, Scherer said the new agreement calls for the Local Government Commission to issue City Music and Entertainment District special revenue refunding bonds series 2017A and 2017B to Bank of America to finance the refunding of the original 2007 bonds, pay the cost of the bond swap agreement termination and pay associated costs incurred with these financial transactions.
The total cost of these actions is to be approximately $15,500,000. This is the remaining amount owed on the original 2007 bonds plus the transaction costs. The LGC approved the termination last week.
“At the end of the day, these actions will allow us to do away with the uncertainty of our annual payments on bonds that have a variable interest rate which continue to trend upward, along with numerous fees and transaction costs and instead establish a fixed rate loan that we can budget for with certainty into the future,” Scherer said in the statement. “Plus, our annual payment will be much lower than what we pay now to Bank of America, giving us some income to make up for the loss of revenue by state legislature decisions.”
Scherer said by telephone today, “The savings are filling the budget from the loss of privilege license revenue of almost $400,000. We don’t have a whole lot of extra money. We’re still having theater expenses. We hope to apply the savings to personnel and their benefits. We’re going to try to give them a cost of living adjustment. I think our people do an outstanding job. We’re going to see if we can’t help that situation.”
He said the city will probably not look at capital expenditures in the upcoming fiscal year. “We may address that next year when we have two capital loans coming off the books.”
Mayor Emery Doughtie said in the statement, “This arrangement will allow us to continue to provide the level of services our citizens have come to expect without forcing us to spend down our savings funds.”
Scherer said the city will continue to market the venue for sale and encourage future development in the area as was originally intended.
He said there are no current serious offers on the table for buying the venue.
As far as encouraging development in the area, he said, “At this point we have to look at some ideas with (county economic development director) Cathy (Scott) and the county to see what opportunities there are with regards to traffic on Interstate 95.”