The city of Jonesboro has made significant strides in securing financing for its ambitious Sports Complex project. After two crucial meetings held by the A&P Commission and the Jonesboro Public Facilities Board, a financial structure was approved that will facilitate the construction and operation of the facility. The plan involves issuing lease revenue bonds through a private placement with Capital One, ensuring favorable terms and lower interest rates. Additionally, the city has already invested $8.5 million over three years, reducing the total borrowing amount and accelerating repayment timelines.
Securing Financial Structures and Partnerships
The approval process involved meticulous planning and collaboration between various stakeholders. The A&P Commission will oversee the construction phase, while the Facilities Board will manage operations post-completion. The bond issuance is structured as a private placement, offering a tax-exempt interest rate and lower financing costs. Capital One emerged as the preferred lender due to its flexibility and competitive terms. This arrangement allows for prepayment options and ensures that any unused funds can be reallocated efficiently.
To ensure transparency and optimal financial management, the Facilities Board will use the rent paid by the Commission to repay the bonds. The projected repayment period ranges from 21 to 23 years, depending on the borrowed amount and prevailing interest rates. The city's prepared food tax collections since 2022 have significantly reduced the need for full borrowing, with $8.5 million already allocated towards land acquisition and architectural fees. This strategic foresight enables quicker repayment and reduces overall interest costs. The resolution also sets a principal borrowing limit of $70 million, providing a buffer for unforeseen expenses.
Selecting Appraisers and Trustees
In preparation for the complex's operational phase, the Facilities Board carefully evaluated potential appraisers and trustees. Colliers International was selected as the appraiser for its cost-effective services and efficient turnaround time. The choice of Centennial Bank as the bond trustee was driven by its competitive annual fees, with Regions Bank serving as a backup. These selections underscore the board's commitment to prudent financial management and cost-effectiveness.
The appraisal services are crucial for determining the fair market value of rent for the Sports Complex, ensuring that the leasing agreement aligns with market standards. Colliers' estimated cost of $8,500 and a three-week completion timeline were deemed optimal compared to other proposals. Similarly, selecting Centennial Bank as the bond trustee reflects the board's focus on minimizing operational costs without compromising quality. The preliminary resolution paves the way for final negotiations, with an aim to lock in interest rates by early March. The bonds, designated as Jonesboro Sports Complex Project Series 2025, will cover design, construction, equipment, debt service reserve, and issuance costs. The maximum term for these bonds is set at 30 years, though efforts are being made to keep it within 20 to 24 years.
