The Urban Redevelopment Agency, charged with issuing a $28.5 million revenue bond to finance ongoing renovations at Augusta Municipal Building, on Friday held off approving the matter until members meet with the Augusta Commission on Tuesday.
The $28.5 million bond, to be paid off using a future special purpose, local option sales tax, was intended to fund the remainder of the $40 million renovation project when city commissioners approved the project a year ago.
Now, as opposition in the community and even among commissioners and mayoral candidates to the May 20 SPLOST grows, agency members are questioning whether commissioners were aware that debt service on the bonds, about $3 million annually, will have to come from property tax revenues if the SPLOST doesn’t pass.
Deputy Finance Director Tim Schroer has told the panel and said again Friday that the ongoing construction project under management by consultant Heery International is running out of cash rapidly and the city “can’t wait” to issue the bonds or it will have to suspend construction while costs escalate.
What’s left in the bank to pay Heery, construction manager Turner Construction and other contractors will be spent by May 20, while delaying the project will cost the city “at least $2 million,” Schroer said, adding that he’d request more specific cost escalation estimates from Heery, whose representatives were out of town and unable to attend the Friday meeting.
“I think we’ve put ourselves in a precarious position,” said agency appointee Terry Elam, the president of Augusta Technical College. “I can say this. I think the commission needs to be very clear to us about their intent to repay this. … I just want that message to come clearly from the commission.
“We started a project before the funding was in place,” he said.
Jim Plunkett, an outside counsel who works with the city on bonding and other development projects, reviewed a timeline of when commissioners had been informed about and signed off on the project’s various elements, including a March 8, 2013, meeting when financial consultant Dianne McNabb described using existing SPLOST 6 and future SPLOST 7 funds to pay for the project and using the city’s existing .71-mill property tax levy to service the debt if SPLOST 7 hasn’t been approved.
Three days later, former city administrator Fred Russell referenced using the property tax levy in discussion surrounding the commission’s vote at a called March 11, 2013, meeting when commissioners voted to approve the project, Plunkett said.
“Where is the resolution on that additional issue” of using the property tax levy, Elam questioned. Plunkett said it was all part of the discussion and in documents commissioners had approved.
Should the SPLOST fail, the city can put it before voters again, and again, if need be, Plunkett said.
Former mayor Bob Young, who also serves on the five-member panel and raised similar questions at the group’s first meeting last week, said renovating the municipal building where he’d worked for almost two terms was “long overdue” but he just wasn’t certain the commission knew what it was getting into.
“I don’t have the clarity that they understand,” Young said, and motioned to table the bond issue. He got no second.
Panel chairman Henry Ingram, insisting no “inferences” that three members of the panel were prepared to pass the matter Friday should be drawn from his decision Thursday to call the meeting, then asked for a motion to approve the bonds and an accompanying intergovernmental agreement between the city and the agency. None was offered.
“It’s resounding to me,” that the project’s costs would escalate from $1.5 million to $2 million if the Urban Redevelopment Agency delays the bond issue, Ingram said, asking for further detail about the costs.
In the end, the group decided to delay acting on the bonds until members could meet Tuesday with the commission, preferably before the commission’s 2 p.m. meeting.
“Tuesday, we will take a vote; you will know one way or the other,” Elam said.
A notice about a called 1 p.m. Tuesday joint work session between the commission and agency on the municipal building’s eighth floor was sent to The Augusta Chronicle on Friday.