The land the city wants to buy is
shown in the area outlined
in yellow above. Six buildable
lots are contained in
the property, which the city wants
to turn into a community park.
Commissioners last week voted to purchase six lots at the corner of Pine Avenue and North Bay Boulevard for $2.8 million with a financing option offered by BB&T Bank.
Prior to discussion, Mayor Mike Selby said he had received a complaint from a resident regarding the rapid pace at which the sale was proceeding. However, Selby pointed out that the commission began discussions on the possible purchase in April.
"At the direction of this commission, we put together a team – a bond counsel, a financial planner, City Attorney Jim Dye, Diane (Finance Director Diane Percycoe) and myself, and we have spent quite a bit of time investigating it," he explained.
Commissioner John Quam asked how to proceed, and Dye said it's a two-part decision – do they want to proceed with the purchase and what financing package do they want to select?
A new deal
"Up to this point, you have been dealing mostly with Blackhawk Bank, which holds the mortgage on the property," Dye continued. "Through the efforts of Jim Gollahon (the financial planner), there's a better financing package out there with BB&T Bank.
"With the BB&T proposal, it really turns the Blackhawk negotiation into a real estate only transaction. BB&T has some intangibles that make it really attractive."
Commissioner Dale Woodland said he still advocates a public/private partnership for the purchase, and asked the board to agree to approve a resolution to that effect in the future. They agreed.
Gollahon said BB&T has agreed that any money that the city raises before the closing could be used to reduce the loan amount.
Quam said the city is pledging revenues from the electric franchise fee, the communications service tax and the half-cent sales tax to make the annual payments and asked, "The city could never default as long as that money is coming in. Is that correct?"
Gollahon said if the revenue drops below the payment amount, the city would go into default, renegotiate the terms or get the money from another source. He said anything over the payment amount could go back into the general fund.
Percycoe said the $225,000 in the budget to replenish the reserve could be used to pay the loan.
"BB&T is one of the most active lenders to governments in Florida," Gollahon pointed out. They're right on board with what we want to do. Blackhawk is not up to speed on typical municipal loans in Florida."
Gollahon said the proposal made by BB&T is contingent on closing in 45 days. Mattick made the motion to make the purchase accepting Option 2 as proposed by BB&T.
Option 2 is a 20-year loan with 3.94 percent interest with interest only payments for the first two years. Payments would be $111,896 each of the first two years and $221,071 for the next 18 years. The total debt service would be $4,117,684.
Chair Chuck Webb said the appraisal that the city came in at $2.55 million, and he felt the $2.8 million Blackhawk is asking is too high.
Quam agreed and said they should negotiate further with Blackhawk, but Selby pointed out, "We're at their breaking point."
The vote was three to two with Webb and Quam dissenting.