Tuesday, June 19, 2007

OK'd Funds

Harrison Square clears loan hurdle
$50 million to finance public portion
http://www.fortwayne.com/mld/fortwayne/news/local/17389306.htm

"The commission unanimously set a maximum annual payment for the bond at almost $5.2 million over a maximum 30 years. The actual payments and length of the loan should be smaller, city officials said, but final numbers won't be available until the bonds are sold later this year. The city previously estimated it would cost a little more than $82 million to pay off the debt by 2033."

"The city plans to use a number of income streams to repay the loan, including state tax credits, property taxes generated by the project, property taxes from the Jefferson Pointe shopping area, economic development income taxes and $2.5 million from Grand Wayne Center."

"The bonds must still be approved by the City Council and the state. Leatherman said to get state approval, the city must prove its projected revenues will cover the debt. The city estimated its revenues will cover the debt, plus 10 percent."

"The commission also formally approved the purchase of land for the Harrison Square project. Three members of City Council requested information last week about how the land was purchased, but the commission's attorney reassured the commission that all its actions were appropriate."

10 comments:

John B. Kalb said...

Does it surprise anyone that the NO PROPERTY TAXES lie would come out? - The lease (bonds) will be guaranteed with the city's General Property Tax revenue. In other words : If any part of this boondoggle fails to make it, the bond, interest and principal will be paid with our property taxes. Leatherman says " We are doing this only so we can get a better interest rate" - another lie to the public - the only reason for a better interest rate is that a lien against property tax revenue is being included in the agreement!
And this time, I'll bet that Lincoln Financial will not bail Fort Wayne out like they did with the Hilton fiasco. Thanks for nothing, Mr. mayor, our six "Yes-Yes" common councilmen, and our "rubber-stamp" Redevelopment Commissioners! John B. Kalb

Scott said...

Makes sense to me. Lower interest rating means less out of pocket money to the bonds. No one is saying that property taxes will be used, but to get people to buy the bonds they need to know that they have a guarantee that the bonds will be paid. It is common sense investing. I figured all along that the bonds would probably be backed up by property taxes. It is a way for the city to back up the bond investment. If you thought for a minute that they wouldn't do that, then you are a little naive.

Jeff Pruitt said...

If they were going to do this then why not just borrow against the $40 Million light fund money?

Scott said...

My guess is that they wanted to use that money for something else and not have it potentially taken away by the Harrison Square project if things don't go according to plan. Maybe they are planning to use that money on the North River Project. They can't put all of their eggs in one basket since economic development needs a long term strategy. If they tied all of the money to Harrison Square, they would not be able to invest in another project shortly thereafter.

John B. Kalb said...

Jeff & Scott- Who the heck is the "they" that you guys refer to? And Scott, how can you use the term "invest" on expenditures of public funds? All public projects are "capital users" - never become investments! What financial return on "investment" will the city of Fort Wayne ever see out of the tax dollars that have been, and will be, spent at the Grand Wayne Center(66% financed by the inkeepers tax paid at all Allen County hotels & motels) or from the downtown baseball stadium (98% of profits go to Hardball Capital)? It's always 20,30,40 or 50 years of paying for these things - even when our young adults want to dicard them (Memorial Stadium?) after 13 years! John B. Kalb

Jeff Pruitt said...

John,

The "they" I'm referring to is the administration. If they would've simply taken out a loan against the city light fund then they would have over $30Million w/o having to expand the TIF district.

I was under the assumption that they didn't want to borrow against that money because it would require the city to back it w/ property taxes. But if they're going to back the HS bond w/ property taxes anyway then why not just use the light fund money?

Then we would've had all this new property paying property taxes into the general tax pool to help pay for things like - say - FWCS...

Scott said...

John

Call it what you want but it still looks like an “investment” to me.

Did you not read the economic impact study? Go the Tuesday April 10 post to read it.

In regards to Memorial Stadium, it was paid off in 14 years (this year), which means it was been in existence of that period of time.

In the case of MS we (the people) should have seen it economic impact by year 10. Instead there wasn’t any economic impact. And yes the young want to discard it because it isn’t economically viable for the area that it is in. Besides, the City or County was going to dump 15 million into MS to upgrade it even though it has no economic value. I don’t know about you but I think that seems like a very unintelligent thing to do.

Jeff -

That is an interesting point about the city light fund.

scott said...

For clarification, there is $1M coming from the Light Lease fund, but oviously the fund isn't covering the whole project.

From what I remember, the Light Lease was considered in the beginning for financing the project, but I believe it wasn't chosen (and I could be wrong about this, it's been a while) because they didn't want to dedicate the money to something that was at that time speculative (since it was yet to be approved by City Council).

Besides, don't we want to use the Light Lease money on venture capital? :)

John B. Kalb said...

Jeff - The City Light fund was generated because of money spent from City Utilities income over the years to build an electrical grid in our city. That's what we leased to I & M for the 40 years. City Utilities has never in it's history had to get any tax revenue to build and operate our water,sewer or our electrical generating and distribution system. Therefore, I contend that the $40 million in this fund should ONLY be used for our city utilities - and they are looking at a very large expenditure for the combined sewers overflow control project - that's where this fund needs to be used!

Scott - Where did you come up with $15 million to revamp Memorial Stadium? Hardball Capital said $10 to 12 million, Randy Brown said $5 to 6 million, and now you come up with $15 million - where from??

And the nice part about redoing MS was that the Allen County Food & Beverage Tax fund has $10 million unneeded dollars in it already - here would be a real NO NEW TAXES way of accomplishing something - but that's unknown to present city planners.

John B. Kalb

Jeff Pruitt said...

Scott,

Touche on the venture capital idea but that's based on where we are today.

John,
I know where the city light fund money comes from and I know we're staring down the barrel of a large increase in sewage costs - to the tune of $250-$300 Million. But I don't agree that money has to be used for city utilities...