It took meeting on consecutive nights, but a plan for financing and paying for Homewood’s new Parks and Recreation Building has been approved.
At a special called meeting of the Homewood City Council on Nov. 8, the council passed a resolution authorizing a 30-year repayment plan for a proposed $16 million bond to finance the construction of the center. Though the resolution received some opposition – ap- proved 7-3 in the absence of Coun- cil President Bruce Limbaugh – its passing means the center is slated to miss only one pool season.
The approved plan includes fi- nancing the project using a split between two companies, with Mer- chant Capitol LLC of Montgomery handling 80 percent and Protective Securities of Homewood covering the remaining 20 percent. The city intends to repay the bond using a 30-year “wrap” method, meaning the financing company fashions payments around the city’s current debt.
Merchant Managing Director Michael Dunn explained this during a called meeting of the Coun- cil’s Financial Planning Commit- tee the night before. Currently, Dunn said, Homewood has an an- nual $4.5 million in ad valorem tax revenue dedicated to its debt ser- vice, and the wrap would allow for more flexibility in the city’s budget to take on additional projects while it pays off the center.
However, using the wrap metod also means more interest payments for the city – another reason some council members wanted to move with haste in approving the bond scenario. Mayor Scott McBrayer said interest rates on municipal bonds are historically low at the moment, and Homewood doesn’t want to miss out.
According to Bloomberg.com, the rate for the 20-year general ob- ligation band – a bond backed by taxing power rather than projected project revenue – fell to 3.55 per- cent at the beginning of November, it’s lowest rate since 1967.
In all, McBrayer said he re- ceived six proposals for financ- ing the center and the Merchant Capitol/Protective Services split was the only one he presented to the Financing Committee. But having limited options wasn’t the rea- son some council members voted against the proposal. Recently elected council members Britt Thames, Jenifer Champ Wallace and Michael S. Hallman said they weren’t comfortable approving the resolution without more time to re- view the bond structure and repay- ment plan.
“It’s clear to me the mayor did do a diligent job gathering the pro- posals,” Thames said. “Although I didn’t reach the comfort levels of having a couple weeks to do it my- self, I do feel like a lot of you have, and I’d just like to say, let’s move forward.”
McBrayer also said a 15-month construction timeline has been set out by BL Harbert International, which the Council intends to enter a contract with this month. Doing so would mean the bond would go to market before holiday closures and would give current occupants of the center their projected six weeks of relocation time.
With all those items in place, Homewood residents can tenta- tively expect the new center to open around the beginning of May 2013.