View Mobile Site

  • Bookmark and Share

Header

MOST POPULAR ARTICLES

 

Project financing divides committee

Recommendation moves on to BOC

POSTED: September 30, 2012 12:33 a.m.
 

The project team for Forsyth County’s new courthouse and jail expansion split a vote Thursday on how to finance the downtown Cumming developments.

The committee voted 4-3 in favor of borrowing from local banks to advance the funding.

The recommendation moves on to the Forsyth County commission, which has the final vote, next month.

The buildings will be paid for through the next special purpose local option sales tax, or SPLOST VII, which voters approved in November.

Collections won’t start until July, but officials planned to finance the projects because the county is in immediate need of the updated facilities.

Forsyth County finance director David Gruen presented the pros and cons of borrowing from banks versus bonding.

The peak amount needed in the cash flow estimates is $50 million in advance if financed in January to meet the proposed construction schedule, Gruen said.

The cost of bonding on a fixed rate is estimated between about $2.16 and $2.86 million, he said.

Comparably, Gruen said the cost of borrowing from a bank is estimated at about $3.2 million.

A combination of variable and fixed rates, based on the current market, would cost between $2.75 million and $2.9 million, he said.

Cumming Mayor H. Ford Gravitt questioned taking $50 million up front, as would be necessary to bond the money.

“What if we don’t need $50 million?” Gravitt said. “Why would we want to go to go with bonds and lock ourselves in and start paying interest on Jan. 1 when we’re only going to spend half of that $50 million in the first year?”

He favored the flexibility of borrowing from a bank, so the county would pay only interest as it goes on what it needs.

Gruen agreed the possibility of schedule changes make the financing a “tough call.”

“There’s a range here that could be as large as $1 million difference between bonding and bank financing if you use all the funds that it looks like you will need as early as you need them,” he said.

“But if things get pushed out later, you could have flexibility and not borrow as much funds in the same time frame.”

However, if the schedule goes according to plan, Gruen said the rates should be what were estimated as the cost of borrowing versus bonding.

Due to the expedited nature of the project, Gravitt called for the project team to make a recommendation on the issue, noting that the commission has the final say.

In favor were: Gravitt, County Commissioner Pete Amos, Forsyth County Sheriff Ted Paxton and David Thornton, county director of public facilities.

Opposed members included Gruen, County Manager Doug Derrer, and county procurement director Donna Kukarola.

Chief Superior Court Judge Jeffrey Bagley was recused due to a conflict of interest because he sits on a local bank board.

Commissioner Todd Levent was absent for the vote.

Members in favor of using banks also cited support to the local economy as a positive.

Paxton said the firms invest in the community.

“If we bond it, who’s making the money on that?” he said.

Kukarola said she voted against it because she needed more information on how bonding the money could be beneficial to the other projects identified in SPLOST VII, which is projected to bring in more than $200 million.

Also during the meeting, the team voted 8-0 to set the total number of beds in the jail at 608, as recommended by contracted project manager Joe Lee.

The data shows that the average length of stay at the jail is about 30 days, Lee said, which the county “cannot sustain.”

He suggested forming a criminal justice coordinating council to identify the reasons for the increase and solutions to bring that length of stay into the range of about 15 to 20 days.

 

COMMENTS

  • Bookmark and Share

Commenting not available.
Commenting is not available.

 
 


Contents of this site are © Copyright 2014 Forsyth News, Cumming, GA. All rights reserved. Privacy policy and Terms of service

Powered by
Morris Technology
Please wait ...