ALBANY, Ga. -- The City of Albany will seek permission from the public to validate up to $30 million in bonds, which if sought by the commission, would allow it to jump start sales tax projects, officials say.
The validation process doesn't obligate the city nor the taxpayer to actually float a bond, City Attorney Nathan Davis said; it merely allows the city commission the authority to obtain bonds.
"It means that if the commission chose to, they could get $5 or $10 million in bonds to start SPLOST projects early," Davis said. "We're just moving forward with the validation at this point."
The hearing on the bond validation has been set for April 7 at the Dougherty County Courthouse, Davis said.
The voters approved renewal of a one-percent special local option sales tax in November during a referendum. Also approved by the voters was a measure that would allow the city to seek no more than $30 million in bond revenues for SPLOST projects.
It's similar to what the city did six years ago at the start of SPLOST V when it issued $14 million in bonds for projects.
"Why would the city do it? Well there are some projects that are timely and could need funding sooner rather than later, like the Broad Avenue Bridge or the construction at the airport," Assistant City Manager Wes Smith said.
Smith said monthly sales tax collections would force the city possibly to wait months or years to save up enough to finance those projects without a bond, long after their deadlines for federal and state matching funds have past.
Collections of sales tax for Special Local Option Sales Tax VI will begin in April. It's expected to generate close to $98 million over a six-year period, with the city set to receive 64 percent of SPLOST funds and the county to receive 36 percent.
According to the Georgia Department of Revenue, the city of Albany received $849,514 in sales tax proceeds during February.
The two biggest drawbacks to floating bonds is they would generate interest, which would have to also be paid back over-and-above the initial bond amount and bond laws require that the money be spent on a strict timetable which -- if not adhered to -- can lead to stiff penalties.
Smith said he believes much of the risk associated with floating a bond has been mitigated, given that bond interest rates are so low.
"And in terms of the penalties and obligation to the taxpayers, we've always tried to position ourselves where what we borrowed could be covered by what we planned to get back in sales tax revenue," Smith said. "The SPLOST revenues are, in essence, our collateral for the bonds."
And the city isn't the only one considering issuing funds ahead of sales tax collections.
At February's meeting of the Albany-Dougherty Inner City Authority, Thronateeska Heritage Museum's Executive Director Tommy Gregors made a pitch for funding for Thronateeska's SPLOST VI projects, which will expand the facility along Roosevelt Avenue.
"Well, the plans are almost ready and we'd like to get started on it whenever we can," Gregors said. "We simply were asking for any level of funding that we could get from ADICA, in case the city decides not to float a bond, to get the project started."
The board of Directors for ADICA have not taken any formal action on Gregors' request.