Business leaders listen to, question bond plan
Published 11:31 pm Monday, August 17, 2009
Selma Mayor George Evans promised a group of nearly 100 business and civic leaders they would have an opportunity to vote on the $10 million bond issue item-by-item, if they chose.
The declaration came during a meeting to discuss the bond issue at the Stribling Performing Arts Center Monday night.
Others who wish to vote for all the items will also find that choice on the ballot.
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Evans spent about an hour going over items under consideration for the $10 million bond issue. The election is Oct. 27.
While some questions rose about items under consideration, most queries from the audience focused on financial matters.
Evans said the bonds would be paid from an ad valorem fund specifically set aside for retiring bonds. If approved, the bonds would be paid off over 10 years.
In other meetings voters had asked why the city included equipment in the bond issue because equipment will not last as long as it takes the city to pay off the bonds.
Evans said he worked with the investment specialists from Sterne Agee on the issue and decided to pay off the equipment in the first five years of the bond issue. The rest of the bond issue would be paid off the following five years.
Of the equipment, Evans said, “If we don’t do it with the bond issue, what else can we do? We have equipment break down every day.”
Robert Thomas of Sterne Agee told the group the city takes in 7.4 mills a year in ad valorem taxes that generates about $900,000 and goes into the bond fund. This money may be used to retire bond debt only. The fund currently has about $4 million.
Thomas said some of that money will be used to pay out a 1999 bond issue and some other items. Some of the other $4 million will pay off the equipment purchases in the bond issue early. Other parts of the $900,000 each year will pay the annual debt service.
Thomas said the cost of the debt service will depend on the interest rate. The city will seek a fixed rate.
Thomas said he does not expect the debacle with Jefferson County to affect Selma’s ability to sell the bonds. The county recently went broke and the Alabama Legislature had to step in to levy a tax that would put county employees back to work.
“Deals are getting done every day in Alabama, irrespective of what was done in Jefferson County,” he said.
David Hooks, another representative of Sterne Agee, said the city could re-invest the $2 million cushion and allow that to grow to help retire the bonds.
Legal fees and other costs would amount to about 2 percent of the bond issue. Of that 2 percent, Hooks said, about 0.8 percent would go to insurance. If the bond issue has such a good rating it does not need the insurance, the fees will drop to 1.2 or 1.3 percent of the bond.