Board to use IRS rules in financing
By Steve Herring
Published in News on April 22, 2016 1:46 PM
Wayne County is taking advantage of IRS rules that will allow it to use future financing to reimburse itself for any upfront expenditures associated with the new agricultural and convention center and a 911 call center.
Commissioners on Tuesday morning unanimously approved Commissioner Bill Pate's motion to adopt the necessary resolutions that include the maximum amount that could be borrowed -- up to $14 million for the Maxwell Regional Agricultural and Convention Center and up to $5 million for the 911 center.
Commissioners have yet to select a debt-financing option for either project. A decision is not expected until the fall.
The county has set aside $4 million for the agricultural center and has applied for USDA loans/grants totaling $2.6 million.
The 10-year, zero-interest loans account for $2 million of the total. The county also plans to seek federal funding.
"Again, we put the maximum amount (that could be needed)," County Manager George Wood said. "That does not mean that is what we will definitely borrow. It just means (county bond attorney) Tom (Lee) wants you to do the maximum that you can do. We put $14 million because you remember we have $4 million saved up to go toward this. We are doing the capital campaign, and it is doing very well.
"But remember, the capital campaign allows people to pay off over five to seven years. So you will still have to borrow the money, and they will be paying you over a five-year period so you will have to be borrowing it on the front end."
If the USDA loan applications are approved, the county would get some money there and reduce the amount that would need to be borrowed through debt issuance, Wood said.
"What we did, we worst-cased it," he said. "So we did $14 million on the ag center and $5 million on the 911 center. That one is definitely worst case because we think the building will cost about three (million dollars), but then you have all that equipment. We are hoping to get a reallocation from the (state) 911 board for the equipment along with some of the money that we have saved up from that fund which is going to be used for equipment.
"All we are doing is saying is we intend to reimburse ourselves from whatever debt issuance we do for these two projects once we get the money. What it allows you to do is go ahead and spend some money now without having to borrow the money. Like on the ag center we want to wait and get bids so we know exactly what we have got. Then we will do the issuance of the debt."
The same is true on the 911 center, Wood said.
"So what this allows you to do is go ahead and pay some of the cost, like on the 911 center the architect's fees and for the study," he said. "Then you can be reimbursed from the debt issuance that you do later on with that in order to pay for that. That is all that is involved here."
But Wood told commissioners if they did not adopt the resolutions, the county could not reimburse itself from the debt issuance for any upfront costs.
Copies of the resolution, including who made the motion and the vote tally have to included in the closing documents for the debt issuance, Wood said.
Commissioners have said they want to break ground in early June for the agricultural and convention center that will be located on a 12-acre site on North Wayne Memorial Drive just north of Wayne Community College.
As for the 911 center, commissioners awarded an $18,300 contract in February to Stewart, Cooper and Newell Architects of Gastonia for a study of five possible options for a new facility.