Timing, Finances Influence Deck Decision

— Mayor Lioneld Jordan wants a City Council decision this week on where to build a downtown parking deck.

Meeting Information

Fayetteville City Council

When: 6 p.m. Tuesday

Where: City Administration Building, 113 W. Mountain St.

On the Agenda: A resolution approving the location for an entertainment district parking deck.

Source: Staff Report

If council members don’t act at Tuesday’s meeting, the project could be delayed for months and costs could increase, city staff, bond counselors and hired consultants warned last week.

“We’re up against it as far as issuing bonds before the end of the year,” Jordan told aldermen Tuesday. “I’m sorry that you’re put in that situation, but that’s where we are.”

The deck, which likely will be built on one of three sites near the Walton Arts Center, has been the subject of debate for more than a year. The City Council in November 2011 authorized the mayor to issue up to $6.5 million in bonds to pay for the project.

Members of a parking deck committee formed by the mayor disbanded last year with no consensus on where the deck should go. The Walton Arts Center’s governing board in July asked city officials to reconsider a site east of the arts center that had been all but ruled out. Jordan then decided he wouldn’t select a site until after the Nov. 6 mayoral election.

Jordan wants to use fees and fines from the paid parking program to repay all bonded debt — a plan his opponent, former Mayor Dan Coody, criticized on the campaign trail.

On Tuesday, Jordan recommended building a five-story deck at Spring Street and School Avenue on the southeast corner of the Walton Arts Center property. The 246-space deck would have room for storefronts and new arts center administrative offices and would cost $6.37 million, according to preliminary designs by Garver engineers of Fayetteville.

Gordon Wilbourn, bond counselor for the project with Kutak Rock attorneys in Little Rock, said underwriter Stephens Inc. needs a few weeks to market and sell bonds by the end of the year.

Wilbourn said he doesn’t feel comfortable going forward with a bond issue that an old City Council approved. Three new aldermen will replace Brenda Boudreaux, Bobby Ferrell and Sarah Lewis in January.

Dennis Hunt, senior vice president and manager with Stephens Inc., said city officials could risk losing the bonds’ bank qualified status if they wait until next year to issue them.

Bank qualified bonds are tax exempt for investors and generally carry a lower interest rate for bond issuers, Hunt said.

By federal law, a municipality cannot issue more than $10 million in bank qualified bonds in a given year, so waiting until January would restrict the city’s ability to take on additional debt in 2013, said Paul Becker, city finance director.

Hunt anticipated a 3.25 percent interest rate over 25 years with the bond package structured as it is now. The city would pay about $382,000 annually and roughly $9 million through 2037.

He expected the bonds to generate about $6.2 million based on available parking revenue. After setting aside money in debt service reserve and paying bond issuance fees, the city would have about $5.9 million to pay direct project costs, Hunt said.

Becker explained the city is required to have 125 percent of annual bond payments, or about $478,000, in its parking fund to prove to investors they’ll be able to repay debt.

Jordan’s 2013 budget anticipates $988,000 in parking fees and fines. After paying for parking operations, transferring some money to the Walton Arts Center and paying debt for parking equipment bought in 2010, Becker estimated $318,000 would be available to make bond payments.

Becker said the city has enough reserve in its parking fund to ensure 125 percent coverage next year. More money will be available when parking equipment debt is retired.

Becker said he wasn’t as confident city officials could meet their coverage requirement if the parking deck were on the main parking lot west of the arts center or on a lot east of the arts center and south of Kingfish bar.

Officials predicted to lose $199,000 in parking fees over a 12- to 18-month construction window by displacing paid spots in the main arts center lot. They said $134,500 would be lost if the east lot is replaced.

With either of those scenarios, the city would have to find an additional money source or increase parking rates, Becker said.

There’s nothing stopping the City Council from coming up with another way to pay for the parking deck, but that would require restructuring the bond package Hunt and Wilbourn put together more than a year ago, Becker said.

And it would go against Jordan’s pledge to use parking fees and fines alone to finance the parking deck.

“This bond issue is not paid by taxpayers’ money,” Becker said. “This is fee-based usage. You use (the parking deck), you pay. You don’t use it, you don’t pay.”

“You would be going away from that (with another financing plan),” he told aldermen last week.

Jordan said, because of those reasons the arts center site is the best fit for the project.

He added, “Whatever decision the City Council makes, I’ll adhere to it.”

Upcoming Events