Friday, August 07, 2015

TOP STORY >> Bonds set for several projects

Leader staff writer

The Jacksonville City Council on Thursday passed 9-1 an ordinance issuing $8.8 million in 15-year bonds to pay off three loans and fund several improvements.

Projects to be funded through the bond issue include:

• Building a long-planned roundabout at General Samuels and Harris roads,

• Renovating the fire department’s Central Station at 900 N. Redmond Road,

• Buying two new fire engines and a ladder truck;

• Expanding the Splash Zone water park by adding a concrete splash pad with a play structure that has a bucket on top dumping water every five to 10 minutes on kids;

• Replacing a structure at the Marshall Smith playground in Dupree Park,

• And buying new exercise machines for the community center.

Finance director Cheryl Erkel said the loans to be paid off break down to approximately $1.3 million for the Game and Fish Foundation Shooting Sports Range, $1.4 million for the public safety complex that now houses the police department and $1.9 million for AWIN radios the city was required to purchase for its 911 center.

The city is still expecting $855,000 of the $2 million grant promised by the Game and Fish Foundation for the shooting range, she noted.

Taking care of the loans this way will drop Jacksonville’s monthly payments from around $150,000 to around $62,000, with the city paying a lower and varying interest rate, Erkel told The Leader.

The monthly savings — approximately $88,000 — will be used to purchase police cars and take care of other short-term needs, Jacksonville Mayor Gary Fletcher said previously. He noted that a 15-year bond shouldn’t fund things with life spans shorter than that.

The mayor also said the process began with a survey of all the departments, which were asked for their short-, mid- and long-term needs.

On Thursday, Fletcher told the council, “This is going to be a good thing for the city, I think, for several reasons. One, it frees up our cash flow as we get ready to go into the budget for next year and deal with things that we have not been able to deal with in the past.

“The projects that are on this bond issue are long-term things that we could never afford to save up to do, and they are needs in this community. Some of them are very, very vital needs, immediate needs,” the mayor continued.

He added that the fire station had not been kept up and firefighters quarters needed to be moved downstairs to avoid liabilities associated with them becoming injured from sliding down the iconic pole.

The mayor also said an unsafe structure at the Marshall Smith playground was removed last fall and had needed to be replaced since then.

He added that Splash Zone is a tourist attraction, bringing people from Greenbrier, Sheridan and elsewhere.

Alderman Mary Twitty asked Parks Director Kevin House what exercise equipment would be replaced. He said it would mainly be treadmills and ellipticals, but decisions had not been made yet.

A public hearing was held before this week’s vote.

No one spoke for or against the ordinance, but — at the mayor’s prompting — Jack Truemper of Stephens, Inc. addressed the council.

“We offered your bonds yesterday for sale. We went to the market at 9 o’clock yesterday morning, and we had a very successful sale. We were able to call the city about 11 o’clock and give you all a commitment to underwrite the bonds, which locked in your interest rates at an all-inclusive cost of 3.03 percent.

“We are set to close the bond issue on Sept. 15,” he continued. “That’s when construction funds will be sent to the city along with the amount of funds that will be available to pay off the three loans. The bonds were very well received in the marketplace.”

Alderman Mike Traylor, the lone “no” vote, also spoke. He pointed out that the roundabout was not included in the bond issue when it was first discussed in May.

The mayor responded that he thought it was wise to include the roundabout rather than make cuts elsewhere to come up with the money to construct it.

Traylor also asked Truemper for clarification on what had been offered and what was received. Truemper answered, “We went out there and put the bond issue, which we had structured to have what we call serial maturities, which means you have maturities maturing every year, ’16 out to 2030, and there was a principal amount of bonds at each of those maturities and interest rates that the investor would receive for purchasing those maturities.

“About a week ago, we sent out what is called a preliminary official statement to our sales force, which is an offering document which tells the story of the bond issue and of the city of Jacksonville. And so, then, so we kind of pre-marketed the bonds, so to speak,” he explained.

Truemper said the firm’s trading desk set the interest rate and customers — individuals and Arkansas banks — were called. The customers chose maturities and placed orders in minimum increments of $5,000, he told Traylor.

Truemper added, after Traylor asked if all the bonds had been sold, “I haven’t seen the balance at the end of the business day, but, from the standpoint of the city of Jacksonville, yes they have all been sold.”

Traylor also asked why the council was voting on the ordinance now. City Attorney Robert Bamburg answered, “The resolution that ya’ll passed about a month or six weeks ago is what authorized them to go forward and do what they’ve done so far. This authorizes the full issuance and then authorizes the mayor and (the city clerk) to sign off on the documents required for the issue to be completed. The sale actually won’t be completed. Jack gave you the date of Sept. 15.”

Traylor said he was under the impression that “the resolution was to go forward and see what the response would be, and it would come back to us on the city council to decide whether or not we were going to do an ordinance, or bond issue and how much. Evidently, that’s not the case.”

Bamburg argued that this was the process for a bond issuance.

Stephens, Inc. is the bond issue’s underwriter, with First Arkansas Bank and Trust serving as the bond trustee. The underwriter sells bonds to investors and the trustee holds onto the money, Erkel explained.