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County opts for bank to finance projects

Work on courthouse, jail could start in January

POSTED: October 9, 2012 8:40 p.m.
 

A local bank has landed Forsyth County’s business in financing the forthcoming construction of a new courthouse, jail expansion and parking deck.

County commissioners voted 5-0 Tuesday to borrow the funding needed for the downtown Cumming projects as outlined by United Community Bank.

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

The tax revenue won’t begin rolling in until July, but the projects will be financed to meet a construction schedule expected to start in January.

The commission authorized county staff to work with United Community Bank on finalizing the three proposals into financing packages for approval.

Figures presented by bank president Tim Heard showed the county’s cost to borrow could range between about $2 million and $2.35 million, depending on whether the financing was based on a fixed rate or a blend of fixed and variable rates.

“The beauty about using a bank is we’re very flexible. We can come up with different scenarios,” Heard said. “It’s a line of credit, and you only pay interest on what you draw and use.

“I think overall it will save the county some money with the draws and with the payback.”

United Community used new information to rework the numbers and bring the cost down, since a late September meeting of the project team.

In its recommendation, the committee split 4-3 in favor of using local banks versus bonding.

At that time, the cost of borrowing from a bank was estimated between $2.75 million and $3.2 million, depending on the financing option.

The cost of bonding on a fixed rate was estimated between about $2.16 million and $2.86 million.

On Tuesday, commissioners focused on the two options provided by United Community projected to cost about $2.3 million.

They debated whether to take the route of selecting a fixed rate, estimated at about $2.36 million, or selecting the option of the first two years at a variable rate and the remainder fixed, estimated at $2.3 million.

David Gruen, the county’s finance director, will work with the bank in nailing down the details of a contract and return with information on the options.

“I like what’s known. If you have a fixed rate, it’s known. However, the variable rates are very attractive,” he said. “The variable rates may stay low for the next two years.”

The financing package is expected to be ready for final approval in the next month or so in anticipation of the construction schedule, said County Manager Doug Derrer.

The project team is scheduled to receive an update on the progress of the project Thursday morning.

 

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