The “bridge loan,” requested by HCD Director Chester Wheeler, is required because the department has spent nearly all of the $8 million the city borrowed three years ago to start the project, officials said.
At least two commissioners said they have questions about the loan request, which is item 10 on a loaded agenda going before the commission for approval at the body’s regular meeting Tuesday.
“Where’s the money going to come from?” Commissioner Donnie Smith asked.
Three years ago, the city issued $8 million in bonds, with a total debt service of $9.2 million, for the urban renewal project.
The $8 million amount was chosen based on expected annual project revenues of $750,000 from an excise tax the commission imposed on hotel and motel room rentals in 2008, according to Finance Director Donna Williams.
The Laney-Walker and Bethlehem project is guaranteed $750,000 annually from the tax for 50 years – a total of $37.5 million – in a deal struck several years ago to win support from commissioners reluctant to move forward with construction of Augusta Convention Center.
The city has about $31 million in its general fund savings accounts from which it could loan the money in anticipation of issuing more bonds in 2015, the next opportunity it has to do so, Williams said.
However, Smith questioned the impact of depleting the city’s savings on its stellar AA2 bond rating from both Moody’s Investors Service and Fitch Ratings.
The ratings agencies use a complex, proprietary formula to issue credit ratings, but the amounts a government has in savings are part of the formula, Williams said.
Asked how the money had been spent, Wheeler said the city had built 19 houses, all of which are occupied, and spent the rest on contractors, land acquisition, and other expenses associated with the award-winning project.
Commissioner Marion Williams said the loan request warranted a conversation at Tuesday’s meeting.
“All those commissioners who want to rush through the meeting don’t realize the importance of dealing with the taxpayers’ money,” he said.
Also up for discussion at the meeting are:
• Unveiling of the final design of a mural to adorn the Rosa T. Beard Memorial Bridge
• An update, requested by Williams, on instructions the commission gave regarding the collection of data related to racial disparties in the city’s award of contracts
• Discussion, requested by Commissioner Joe Jackson, of hiring a department director to collect disparity data and handle equal employment issues, as the city charter specifies
• An update, requested by Williams, on the city’s downtown parking plan and reconsideration of parking recommendations from a 2005 parking study
• Reconsideration, requested by Williams, of a proposal to merge Augusta Municipal Golf Course with First Tee of Augusta