BRISTOL _ Questions and concerns arose on Monday as the Bristol Town Council discussed ways to finance the new municipal complex they hope to build.
Heidi Amspaugh of Umbaugh and Associates introduced the council to a number of payment options with interest rates provided by First State Bank of Middlebury. Two other banks have also sent information, Interra Credit Union and Lake City Bank.
“In discussions that we’d had, it was clear that folks were working on putting together numbers and talking with banks to get proposals," Amspaugh said, "but nobody had put any numbers on paper to actually show what kind of annual payments we’re talking about and what revenues the town had been considering to pay for this type of deal.”
JPR has estimated just under $3.2 million for the entire project, which is the number used by Umbaugh to determine factors such as down payment, interest, yearly pay rates and payoff date. This number is not set in stone, however, as the town has not yet requested bids for the project and so other numbers are just estimates as well.
Amspaugh suggested the council consider making a down payment of just over $1 million for the project, and then request a loan of $2.1 million. The loan would have a construction loan fee of .25 percent and fixed interest rate of 3.38 percent from closing through the first 10 years of the bond, and then it will reset based on the new variable rate, estimated at 4.5 percent, and loan amount left to pay off. There would also be additional issuance costs for the project.
In total, for a 15-year loan, the town would be faced with a roughly $180,000 annual payback cost, or $150,000 annually for a 20-year loan.
Original suggestions to the council were to use money from the MS4 Stormwater Retention Funds, Major Moves Funds, Cumulative Capital Development, Golf Course Funds and South TIF District for the down payment, but many council members were not in agreement on the use of each of these funds for a variety of reasons.
Town Attorney Glenn Duncan of Thorne Grodnik questioned whether $450,000 of the project could really be pulled from the stormwater retention fund, since it was also suggested to use the MS4 funds to pay for yearly contributions at a rate of $30,000 each year. He requested the council get more information from JPR to find out exactly how much could be used.
“That can be the parking lot, how they design the roof, the retention ponds, drainage systems off the roof and on the parking lot. I don’t think you’ll have a problem getting several hundred thousand dollars of that presently proposed plan included as part of the design,” Duncan said. He also expressed concerns as to whether or not the MS4 account would continue to exist in the coming years. “If you add that together, that’s almost a million dollars and I don’t think JPR’s going to be able to come up with a million dollars worth of things that are supportive of stormwater retention. That’s a real stretch.”
Concerns also mounted as to whether the town should use the golf course funds.
“I don’t think it’s a very good long-term funding source,” Duncan said, adding that the golf course’s contract is up for renewal in the coming years and it might be possible that no individual wants to own part of the course. The town currently owns 18 holes, while a private owner has 9 holes. “Maybe they’ll want the same deal, maybe they’ll want a better deal, I don’t know if that’s a very good, predictable cash flow and I would encourage you to not use that as your long-term amortization.”
The council also expressed concerns for using the Major Moves fund, since it was a one-time payment from the lease of the toll road.
“INDOT has already slated us for sometime within the next 26-48 months, they’re going to resurface SR 120,” Norman said. "This falls right in line with our Main Street Project and that’s what Bristol on the River is all about is designing the new main street, the face of it, and because it’s not tax dollars, I think it will qualify as matching funds for the (Community Crossings) grant. To just squander that away to try to pay a million dollars up front on this project, my personal option is, I think we’re looking to deplete too many funds here.”
To that, Amspaugh asked the council to consider that a property tax levy would likely require a remonstrance. The council seemed strongly against this idea, as they told town residents during the town hall meetings regarding the new municipal building in recent months.
Luckily, there were ideas for other income sources to pull from discussed during the meeting. Council president Ron Norman suggested that a portion of the North Tax Incremement Finance District funds may also be used.
“We’re currently in negotiations to bring three corporations into the town and provide services to them. There’s a future revenue source for the town,” Norman said.
Currently, 40 percent of the North TIF funds are earmarked and the town has an obligation to pay 75 percent of the South TIF funds to the county. Nonetheless, Duncan told the council, there may be enough funds there to consider using a higher proportion for the project.
“You haven’t had a real plan for spending your TIF revenue,” Duncan said.
While there are plans for the South TIF district to expand to the industrial park, road work is planned and new annexations are in negotiations, there is nothing official yet. The South TIF currently has around $900,000. Duncan suggested that more funds from the TIFs should be used, but some council members did not agree.
“It’s not that we haven’t identified what we’re going to spend it on, we just don’t have documentation for a future plan,” councilman Jeff Beachy said.
Council member Cathy Burke instead asked if the use of the Public Safety Local Option Income Tax might be a viable option, since the building would also house the police department. LOIT funds can be used for any public safety developments including salaries, traffic signals, machinery and operating expenses relevant to the safety of the public.
However, Norman remarked, "Not being a guaranteed revenue resource, I don’t think it should be included in this. I think we should look elsewhere."
The Cumulative Capital Development fund gets about $56,000 yearly and is one of the larger yearly income sources the town receives. The town does not use it very often — the fund currently has close to $900,000 in it and almost none of it has been used in the past 10 years, council heard.