Aldermen put final touches on TIF bond repayment
In a two to one vote, the Poplarville Board of Aldermen passed a bond resolution that means the city will move forward with issuing the Tax Increment Finance Bonds.
The bonds cannot exceed $595,000 and will be used to reimburse the developer for some of the costs of constructing the College Square Shopping Center Project. The bond issue will last for 10 years at a 5.5% interest rate, which should accrue $194,150 in interest.
The city will pay a $70,000 per year loan payment for the bond issue. The bond is being funded with 50 percent of the sales tax revenue from the shopping center and ad valorem tax from the shopping center.
Board members Shirley Wiltshire and Russell Miller voted in favor of the resolution, Anne Smith abstained and Kevin Tillman voted against. When a Board member abstains, their vote is counted on the side of the prevailing vote, according to previous state attorney general opinions.
The resolution included approving the bond purchase agreement, the city assessment certificate, the county tax assessor certificate, the sales tax diversion certificate and the tax pledge agreement.
The Board had passed a motion that tasked Bond attorney Troy Johnston with preparing the bond resolution Aug. 4. However, the resolution passed Thursday authorizes the bonds to be issued, necessary accounts to be opened and authorizes the mayor and city clerk to sign the documents related to the bond issue, said Johnston.
The Board originally created the TIF district in 2017 along with the Pearl River County Board of Supervisors.
The next steps will be to validate the project invoices submitted by developer Jimmy Pickering to ensure they are acceptable expenses for reimbursement. He submitted $1.3 million in invoices, but all of those will not qualify, said Johnston. Many of those invoices were for concrete, which are being verified currently to ensure that none of the concrete costs submitted were used for the foundation of the building. Validation should take approximately a month.
Once those are validated, the Board will have to approve giving Pickering money from the bond proceeds. Any city expenses incurred in attorney fees or publication expenses related to the bond will be paid out of bond proceeds before the developer is paid.
Board members Anne Smith and Kevin Tillman, along with City Clerk Jane O’Neal expressed concerns that the bond issue might be too much of a financial burden for the city.
“If this is going to put the city in bad financial standing, what are we supposed to do, because right now we’re having problems trying to balance the budget without that payment in there, and my concern for the next 10 years is, what’s going to happen with this?” said Tillman.
O’Neal said the Board has had to dip into the “new money,” or ad valorem and sales tax dollars, generated by the shopping center, and still had trouble balancing the current budget.
“To stay in this situation for a decade with this level of debt is very concerning, because if you can’t balance it this year, you probably won’t be able to balance it next year,” she said.
Mayor Rossie Creel said he does not feel like the city is in dire financial straits and felt the Board should issue the bonds because that agreement was made back in 2017.
“I think that we have to tighten our belt for the next several years, no doubt. Spending is going to be limited, but we also have a whole lot of streets that we paved, we have a whole lot of infrastructure that we improved. We have a brand new shopping center. Those are investments that we had to make, that we have to pay for,” Creel said.
Creel added that the city’s sales tax revenue has increased since the shopping center was built in 2017.
The Board has held multiple budget workshops to balance the proposed city budget for the next fiscal year, and has had to cut items like striping on Main Street, new turnout gear for the fire department and a new sign for City Hall. The city is also taking on some large new expenses, including $50,000 for the 911 dispatch as part of the countywide E-911 consolidation, and debt service payments for the general obligation bond that funded the 2019 asphalt paving and drainage project. The general obligation bond will be paid with gas severance tax.
Smith said she understood that the city would be getting some public infrastructure out of the project, but Johnston said the project was always meant to be primarily about economic incentive. Smith said she felt “misled” by the presentations the Board had originally seen on the TIF Bonds back in 2017.
“In this instance it’s always been, that it would be primarily private improvement. That’s always been my understanding,” said Johnston.
Smith also asked if the Board should consider getting bond insurance, but Johnston said that for a bond issue of this size it would not be worth the cost.
“You’ve got a nice grocery store…and you’ve got a population that uses it. It seems like they exceeded what they thought they were going to do the first year. Project risk is relatively low in this,” he said.
Smith said she appreciated Ramey’s and the shopping center, but was also worried about the state of some of the sidewalks around the shopping center. Creel said the sidewalks she was concerned about are actually owned by the city, not the shopping center.