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Financing set for sales tax projects

Board votes 3-2 to borrow from bank

POSTED: November 29, 2012 12:33 a.m.
 

The Forsyth County courthouse and jail projects in downtown Cumming will be financed with a bank plan described as “flexible.” 

Commissioners voted 3-2 on Tuesday to select a floating rate option to borrow money through United Community Bank.

The option allows the county to borrow as needed with a variable rate for two years, after which it will evaluate whether to continue with the market-based rate or set a fixed interest rate.

County finance director Dave Gruen said the bank had estimated the cost of borrowing at about $2.8 million, based on current market conditions.

The commission last discussed the funding in early October, when it decided to select financing through the bank instead of bonding.

At that meeting, the cost of borrowing was estimated between about $2 million and $2.35 million.

Commission Chairman Jim Boff, who joined Commissioner Todd Levent in voting against the proposal, questioned whether the rates were final.

“Do you feel confident that these numbers are now doable and something the bank can agree to do, and that this is the lowest cost to the county of the approaches we had looked at before, including bonding?” Boff asked Gruen.

Gruen responded that the bank agreed to each of the options provided.

He estimated the cost of bonding the anticipated need of $50 million at about $2 million.

Commissioner Brian Tam affirmed the preference to use a bank because of the ability to pay off the debt earlier instead of a preset schedule with bonding.

Commissioner Patrick Bell made the motion to select the flexible rate funding option from the bank.

“The bank also allows us to meet the spirit of what we told the voters, that we’re going to borrow as little amount of money as possible and pay it back as soon as possible,” Bell said. “This gives us that flexibility.”

The projects were approved by voters in the most recent extension of the special local option sales tax, or SPLOST VII, and are budgeted at $100 million.

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.

According to an e-mail from Jodi Gardner, county spokeswoman, demolition of the existing buildings is anticipated for January.

The date for the start of construction has not been set, Gardner wrote. Any costs incurred so far have been paid through the county’s general fund and will later be repaid from the sales tax revenue.

 

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