GARNER — The town council agreed to bear about two-thirds of the cost of burying power lines for the White Oak Development at their Nov. 19 town council meeting, and Core Properties owner Richard Barta expressed gratitude and promised continued good news regarding the development.
The town elected to cover the first $350,000, roughly the cost they’d have to spend anyway to move power lines as part of a road project rebuilding the confluence of I-40, U.S. 70, and White Oak Road. Based on the idea that both the town and the development would benefit from the power, they offered a split of the remainder, most recently estimated at $281,500 each.
“We do not have this in our budget at all, but we are going to find a way to do our part,” Barta said. “We couldn’t do it without your support. If you had taken a different direction, say ‘you pay,’ we would have gone back and tried to find a way. I’m not sure we could have.”
Barta said “almost every square foot” of the planned development north of U.S. 70 at Jones Sausage Road was either spoken for or in serious negotiations. He also reiterated plans to break ground on preparing the site for Cabela’s in January and transferring control of the site for construction to the outdoor gear giant in June.
The split was not unanimously supported. Ken Marshburn said he didn’t understand why the whole $913,000 estimated cost shouldn’t be split 50-50. He disagreed with the town spending hundreds of thousands more to improve the aesthetics of a site for a private developer. He cast the lone dissenting vote against the plan.
Kathy Behringer offered a similar sentiment, but not a similar vote.
“I would prefer a 50-50 split as well, but I don’t want to hold the project up,” Behringer said.
After considering borrowing more to take advantage of historically low rates, the town decided to stick to a $10 million limit for the first round of bond borrowing to avoid losing bank-qualified status. It also moved the closing date forward to January so that earlier, unrelated 2013 borrowing wouldn’t count toward the calendar year limit.
Exceeding the maximum for bank-qualified status – thus eliminating certain incentives for lenders – could raise the interest rates offered.
At the Nov. 19 meeting Ted Cole of Davenport & Associates, the financial company the town has contracted to advise on the bond sale, said the interest rate on a bank-qualified bond was 3.45 percent. Non-qualified rates stood at 3.71 percent.
Both rates remain low by historical standards. But borrowing enough extra money to make the savings of low rates worth a quarter-percent premium would put the town in a cash-flow bind, according to Finance Director Emily Lucas. If it did borrow more, projections indicate it would be impossible to avoid running out of cash without raising taxes beyond the promised max of 2.75 cents. The town would also have to borrow money it may not be able to spend for years, which could pose other problems.
“Our models say basically this is what you can borrow the next couple years to stay within cash flow and tax rate model,” Lucas said.
Rates have risen slightly in recent weeks and could fluctuate further. But they’re still lower than the 4 percent used in projections to plan the first sale of the bond program. Future sales are projected at 4.5 percent.
This winter’s sale will be the first major borrowing in the $35.7 million bond program that voters approved in March. They will fund a new police station among other projects. No other sales are planned for 2014, meaning that moving the sale up would not affect other planned borrowing for projects slated for later in the bond process.
Jahner: 919-829-4822; Twitter: @garnercleveland