COLUMBIA — The city of Columbia is using a special type of financing for the first time to borrow $57 million to pay for a downtown office tower and other projects throughout the city.
Most of the money — $33 million — will be used to pay for and renovate an office building at 1401 Main St. the city bought last year as its new municipal headquarters.
Remaining money will be used for the city to complete the purchase of the U.S. Post Office property on Assembly Street, buy property currently leased by the police and fire departments, and pay for a new citywide security camera system to replace an existing system, among other things.
To do this, the city used a special type of financing called an installment purchase revenue bond that allows the city to take on more debt without it counting against its state-mandated borrowing limit of 8 percent of the assessed property value in the city.
As of the end of June 2020, the city had $31.8 million of its $50.3 million legal debt limit available — numbers that will be updated at the end of June.
The $57 million total would have exceeded the city's borrowing capacity through traditional general obligation and revenue bonds, chief finance officer Jeff Palen said. While other bonds tie repayment to a specific revenue source such as property taxes or sewer fees, this type of borrowing allows the city flexibility in the money available to pay off the bonds.
The annual payments will come from general fund budgets proportional to departments' use of the Main Street building and other projects, Palen said. The city expects to save $1 million in lease payments while earning $1.6 million from leased space in the new building.
It's the first time Columbia has used the borrowing method, though the bonds have been used by other local governments throughout the state in recent years.
City officials say the deal is covered, in part, by money saved in getting out of leased office space throughout the city. Columbia will also make money from private companies and other public agencies that lease space on about five floors of the building, officials say.
Interest rates remain low and the city needs to take advantage of opportunities to invest in its infrastructure when possible, Mayor Steve Benjamin said.
"We know how to manage money," Benjamin said. "We've improved our credit ratings; we've never raised taxes. I think people would and should give us the benefit of the doubt that we’re making good financial decisions."
City administrators plan to make 1401 Main St. building the base for Columbia's operations and city services when renovations are complete. The city departments could begin moving into the new building in September with the goal of everyone being in place by June 2022.
"Even having us as executive management to be able to interact with the staff on a daily basis is critical for me," city manager Teresa Wilson said.
The city will sell the Washington Square office building across the street to return the property to the tax rolls. The property is prime for private redevelopment and could help bring more activity to that area of Main Street, Wilson said.
City Hall at 1737 Main St. will remain the place City Council conducts business.
Among the other projects on the list to be paid with the bonds are the purchase of a Bluff Road building the police department has leased for the past several years, a Devine Street building and parking garage, to implement a new surveillance system throughout the city, expanding the facility where city vehicles are stored and serviced and sidewalks, street lighting and road paving in the BullStreet District.
The money would also complete the purchase of the post office building on Assembly, which the city initially bought with a two-year bond note. City officials said they want to control the future of the site leased from the city by the Postal Service and that its location adjacent the city's Finlay Park offers flexibility for future park plans.
The bond deal is structured by the creation of a separate nonprofit organization — in this case called the Columbia Facilities Corporation — that issues the bonds, with the city making annual payments to the corporation for principal and interest over the 30-year term, gaining a larger ownership stake with each payment until the bonds are paid. For legal purposes those payments don't count as debt on the city's books but are included in its annual budget.
The nonprofit board formally organized and voted to issue the bonds April 22. City Council approved the process in December 2020.
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City of Columbia borrows $57M to pay for Main Street office building, other work - Charleston Post Courier
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