Brunswick City Commissioners on Wednesday heard a proposal to borrow $4.6 million to build and furnish a conference center downtown.
The Virginia-based financial firm Davenport & Co. presented commissioners with several options to finance the construction of the proposed Oglethorpe Conference Center in the 1700 block of Newcastle Street. Davenport estimated the center would cost $7.1 million, of which the city already has secured $2.5 million in special-purpose, local-option sales tax. City officials have previously estimated the total cost to construct the 20,000-square foot center to be around $8.1 million.
Douglas J. Gebhardt, a vice president with Davenport, told commissioners they could finance the $4.6 million balance using intergovernmental contract bonds or direct bank loans. He recommended using direct bank loans because they do not require a credit rating for the city, could be paid off more quickly and the loan acquirement process would be quicker. The city has not currently been assessed a credit rating, and that process would take time, he said.
If the city were to go with the bank direct loan option, Davenport estimates the $4.6 million loan would cost the city about $2.1 million in interest over 20 years. The annual debt service payments would be about $345,000, assuming a 4 percent interest rate was locked in and the loan was not paid off early.
Davenport’s financial projections estimate the city could borrow the money without significant impact on a future credit rating, Gebhardt said, as long as the city does not borrow any other large sums of money.
Following Gebhardt’s presentation, commissioners had few questions. Only Commissioners Julie Martin, South Ward, and Johnny Cason, North Ward, asked about the borrowing process.
Martin asked whether or not the debt service would cover the yearly operation of the center. City Manager Jim Drumm explained that it would not, and that operational expenses would be a different pool of money.
A previous feasibility study by consultant Bob Coffey of Savannah found the conference center would likely run a yearly operational deficit of about $300,000, which would be on top of debt service.
Drumm also noted the debt service could be paid from the city’s general fund.
At the close of Gebhardt’s presentation, Mayor Cornell Harvey instructed city staff to have Davenport to prepare a request for proposals, or RPF, to send to potential lenders.
Davenport representatives are slated to return to the city commission Dec. 5 with the responses by banks to the RFP.
If commissioners approve the financing, documents could be finalized by the end of December and the city could close on the loan sometime in early 2019.
In a related matter, city commissioners were slated to approve a contract with the Jacksonville-based building firm Elkins Construction at their meeting Wednesday.
However, Cason called for the matter to be deferred, which was seconded by Commissioner Vincent Williams. The motion passed unanimously.
If it had been approved, the move would have begun the pre-construction process for the conference center, and allowed Elkins and LaRon Bennett, chairman of the Urban Redevelopment Agency, which is overseeing the conference center project, to select subcontractors.
During a public comment portion of Wednesday’s meeting, Magnolia Avenue resident Caroline Wright presented commissioners with a petition by her neighbors. The petition requests the city abandon the conference center project, she said.
“I’ve never talked with my neighbors (about the conference center project),” Wright told commissioners. “I thought how I could best do that, so I thought, I’d set up a petition for my neighbors in Windsor Park. I intended to be out an hour, and I was out two hours. Not only did they want to sign the petition that this vote tonight (the vote which was deferred) to be in the negative, they wanted to talk to me about this.
“What I’m here to do tonight is to present this petition to the commission,” she continued. “If you will accept it, I give it in the spirit that it’s written. All of my neighbors that I spoke with were against building the conference center.”
Wright received a round of applause from the heavier than usual crowd gathered at Old City Hall for the meeting.