Council devises means to fund project
By Ty Johnson
Published in News on January 25, 2012 1:46 PM
Discussion of the Center Street Streetscape project dominated much of the Goldsboro City Council's work session Monday night, as Finance Director Kaye Scott shared financing options for the nearly $2 million renovation to the 200 block of North Center Street.
Mrs. Scott spoke during much of the session, sharing with the council a six-month update on the city's finances showing both general fund and utility fund revenues were just ahead of schedule through December.
General fund expenditures were ahead, as well, as were expenditures within the occupancy tax fund, although the bulk of those expenses was a $475,000 payment to purchase the building at 2406 E. Ash St. from the Arts Council of Wayne County. The city has tabbed the building to be an Air Force museum.
The city update also revealed that officials were on pace to accumulate $1,186,000 in attrition this year, with departments saving $640,510 worth of salary by holding about 47 vacant positions open throughout the fiscal year.
The discussion of the city's debt service payments became a request for permission to pursue refinancing options for the four large projects the city is still paying off. Mrs. Scott said the loans for phases one and two of the City Hall renovations, the Paramount Theatre construction, and the automatic meter reading renovation in 2006 could likely be consolidated into a single loan with a much lower interest rate. The current interest rates for the projects range from 3.62 percent to 4.54 percent while Mrs. Scott said she found the city could refinance and get a loan at a rate as low as 2.35 percent.
Based on a conservative 2.6 percent refinanced loan, Mrs. Scott projected $56,375.03 in savings each year for a total savings of $563,750.29.
Council approved Mrs. Scott's request to pursue refinancing options, and a public hearing will be held Feb. 6 to discuss the reshuffling of the city's finances. Mayor Pro Tempore Chuck Allen proposed using utility fund reserves to pay off the smaller, older loan for the meter changes.
The refinancing discussion bled into talks about the Center Street Streetscape project with Mrs. Scott sharing financing options for the project, showing the original proposed loan and one with just less than 6 percent contingency. Allen had questioned the necessity of the 20 percent contingency, amounting to $278,000, advertised in Mrs. Scott's initial release of estimates for debt services should the city undertake the project.
District 2 Councilman Bob Waller, however, cautioned that while the 20 percent contingency amount was a precaution in case engineers found that the project would be more complicated than predicted, there were equal chances that the city would need less than that amount or more than that amount, citing unknowns acknowledged by City Engineer Marty Anderson at the Jan. 9 meeting. Anderson said there was no telling what workers could find beneath the old road.
"It could also go the other way," Waller said as the council eyed the proposal with $83,000 of contingency built in.
Either way, both debt service situations were shown with the refinancing option discussed just minutes prior already in place. It showed that with the larger loan of $895,000, debt service would increase by $25,838 for one fiscal year (2012-13) before it began to decrease for all years following. The smaller loan showed a savings in debt services of $16,190 in that same fiscal year and a trend which continued exponentially.
Later, Mrs. Scott continued her presentation with a slide showing financing options for the next two blocks of the project per the council's request.
Council members asked at their Jan. 9 meeting what was in store for the rest of Center Street after the 200 north block was renovated, questioning when the next portion would be done and whether it would plunge the city further into debt.
"How long before they come back with another block?" District 6 Councilman Jackie Warrick asked at the meeting. "Are we going to go into debt again?"
Mrs. Scott's presentation, which approximated the next two blocks would cost roughly $2 million each, showed the implementation of a loan beginning in fiscal year 2013-14 would balloon the city's debt payment that year by nearly $400,000 with additional payments in the three years following amounting to $200,000, $150,000 and $83,000 before paying down the city's debt service from its current level in fiscal year 2017-18.
A separate chart showed that delaying the project loan until fiscal year 2015-16 would have a similar effect, with the city beginning to pay down its debt service beginning in 2017-18 as well.
The discussion of financing for the project was interrupted at times by Waller, who asked questions ranging from the electrical connections for businesses along Center Street to who owned the median of the street where holly trees stand and a railroad once sat.
City Manager Scott Stevens said the electrical connections for the first block of Center Street to undergo renovations would not likely cause problems for businesses as the connections would remain largely in place. He said future blocks of the renovations would be more challenging with utilities needing to be fixed for several different businesses. Still, he cited precedents from similar projects elsewhere.
"They've done this in other communities," he said. "We're not plowing new ground."
His question about the median, however, seemed to catch Anderson, who was knowledgeable about the state of the street's utilities, off guard.
"I would imagine they would have abandoned that right of way," he said when asked by Waller if the railroad company still owned that land.
"You would imagine?" Waller asked, insinuating that due diligence might not have been done concerning the strip of median where citizens of Goldsboro, with the blessing of the city's elected officials, removed railroad tracks from in 1926.
Stevens said he would be glad to research that issue, but Downtown Goldsboro Development Corp. Director Julie Thompson spoke up and confirmed that the city did in fact own the right of way it was proposing to renovate.
During the discussion, Stevens also suggested using municipal service district funds to go ahead and replace all of the trees along Center Street and to purchase planters and trash cans to give the street more of a flow during the interim between projects.
Stevens admitted that the removal of the holly trees would be emotional to residents attached to them, but pointed out that if it was delayed, "it will be emotional twice."
That led to discussion of the city's Christmas decorations, which had been discussed as needing replacement in earlier meetings. Stevens also said there were concerns from Progress Energy about the safety of the lights on the southern end of the street.
"It's time to do something different with our Christmas decorations," Stevens said.
District 4 Councilman Charles Williams suggested putting the decorations on the utility poles, although Stevens noted that those poles wouldn't exist in the future. A large portion of the renovation project, which has been discussed at the council level for nearly two years, involves putting all utilities beneath the ground.
Allen expressed his displeasure with the enforcement of ordinances requiring downtown property owners to keep their buildings looking nice, saying that the city needs to crack down on violations to ensure the city center looks as good as it can.
No action on the Streetscape project was taken Monday. A recommendation from staff is expected at the council's Feb. 6 meeting.