By RICK KRON
Leader staff writer
Sherwood hopes to close on the North Hills golf course Aug. 29, and in the meantime it has signed an eight-page legal document that allows city crews onto the property before that time to start mowing and cleaning up the 106-acre property.
Lee Ann Jennings with Twin City Bank reported to the city’s facilities board Thursday that the bank was processing the paperwork necessary for the city to secure up to $6.1 million, and she said it was the bank’s intention to have everything in place well before the closing date.
Linda Napper, chairperson of the facilities board, said it would be borrowing $5 million, plus closing costs, from the bank.
The $5 million figure was reached in settlement in late July between Sherwood, which had condemned the acreage, and the owners of the property, Club Properties.
The agreement, which was approved by the Sherwood City Council in July, said the city would pay $5 million for the property, plus appropriate fees, and in turn, Club Properties will drop all lawsuits against Sherwood. The financing from Twin City Bank is considered to be short term as the city, through the facilities board, looks at longer term financing possibly through a bond issue.
The bank financing will be for three years at a fixed rate of 6.5 percent amortized over a 25-year period, meaning the monthly payments on $6.1 million would be about $41,000. Besides getting the loan update from Twin City Bank, the public-facilities board at the meeting Thursday also decided to have Stephens Inc. serve as the financial adviser through the short-term loan and help secure long-term financing.
“They’ve earned enough money off of us for us to impose on them,” board member Jack Wilson said.
The board has received statements of qualifications from Stephens, as well as Morgan Keegan and Crews and Associates.
“Any of the three are very qualified and any one of them would do a great job,” said Wilson.
Stephens is not guaranteed the bond issue. “There may not even be one,” Linda Napper, board chairman said. “It depends what the council ends up doing with the property.”
But the board will use Stephens’ expertise in advisory capacity. “There’ll be no payments to the firm unless a bond is issued,” Napper said.
The council won’t make any firm decisions on the use of the green space until a master parks study is completed later this year. The study is taking a look at all Sherwood parks, possibilities for the North Hills acreage and future parks in the Gravel Ridge area.
Alderman Becki Vassar said, “We so desperately need to keep the North Hills property as green space, not housing. There’s only so much green space available, and we need to preserve this special place for generations to come.”
“I’m glad that we have a resolution,” said Mayor Virginia Hillman after the July council meetings, “and it will be a very nice place, but I’m still very concerned about the financial liability.”
The ordinance approved by the council authorizes the settlement of the litigation for $5 million, plus “ ancillary expenses of closing, including sums and fees required for financing and title insurance and closing service.” The ordinance says payments will be made within 45 days.
The ordinance also states that the property “should be preserved as a public park, including green space, and for other public purposes to be developed, including without limitations—parks, recreational facilities, hiking and biking trails and other purposes for the betterment of the city.”
Stuart Hankins, attorney for the owners of the golf course, issued this statement after the two sides agreed to the settlement, “Club Properties, Inc. confirms that it has agreed to accept the sum of $5,000,000 in return for the conclusion of the state court condemnation case and the dismissal of the federal court civil rights case subject to the city’s ability to complete its financing arrangements.”
Hankins went on to say, “While the principals of Club Properties, Inc. are not particularly happy about this resolution, they believe that it is in their best interests to bring an end to this expensive and time-consuming litigation process.”
Sherwood, which condemned the property earlier this year through eminent domain, would have been in court this week and next week to haggle over the fair market value of the property, but the agreement makes that trial moot.
The city has had the property appraised at $2.2 million, but the owners have a $5.5 million appraisal and had a valid offer of $5.1 million before the city put a building moratorium on the property in May 2007.
A new appraisal was finished the end of July for Twin City Bank, and the bank should receive that appraisal next week as it continues to process the loan paperwork.
Club Properties also had a federal lawsuit against the city for the building moratorium placed on the property by the city, which was a catalyst in a $5.1 million deal the owners had with a developer falling apart. The judge put that trial on hold, pending the outcome of the condemnation trial. Club Properties, according to the agreement, will now drop that suit.
Current plans call for the city to pay the facilities board through franchise fees the city collects from various utilities.
Last year, the city collected $481,000 in franchise fees. It will need up to $468,000 a year to cover the cost of the bank note.
Franchise fees collected from North Little Rock Electric are currently frozen and a point of contention in a lawsuit between Sherwood, North Little Rock and First Electric. All three parties are working on a settlement of that lawsuit that would free up those franchise fees for Sherwood’s use.