ALBANY, Ga. -- The Albany City Commission has approved a resolution that will allow bids to be taken on up to $14 million in general obligation bonds intended to jump start sales tax projects approved by the voters last November.
The commission voted 6-0, with Ward VI Commissioner Tommie Postell absent, to allow Mayor Dorothy Hubbard to sign a resolution that allows bids to be taken for the bond project.
A secondary resolution will need to be passed after investors bid on the bonds before the money can be raised, City Attorney Nathan Davis said Tuesday night.
"We're asking for the bond so we can get many of these projects off the ground; to create a little economic vitality for the area and put some people to work sooner rather than later," Taylor said.
When the voters overwhelmingly approved renewal of a one-percent sales tax shared by the city and county for local projects last November, they also approved language on the ballot that would allow either entity to seek a bond to expedite the start of the projects.
According to the ballot, voters approved that up to $30 million worth of a bonds could be floated in advance of the collection of sales tax proceeds.
Jaime Willson, the city's bond broker, will present the bidders and a presentation before the city commission on May 15.
As sales tax revenues trickle in over the next five years, the bond will be paid back out of those revenues.
As with anything, there are risks with using general obligation bonds.
Like a credit line, interest — in this case up to five percent — will be tacked onto the bonds that are used and, should sales tax revenues not keep pace with the bond payments, the bonds are backed by the full faith and credit of the city of Albany, meaning that your tax dollars could be used to repay the loan. In the worst case scenario, Georgia law allows the city to levy a tax increase on paying off any deficit for debt.
Davis said Tuesday night that Willson has assured him that the actual effective interest rate won't top two percent.
"The investors, he said, like having big coupon items on their portfolios even they're being paid less," Davis said.
By choosing to get a bond, the city is also at risk of being assessed penalties if they don't spend the money fast enough, a process know as arbitraging.
But by choosing to only use $14 million — less than 16 percent of the total revenues expected to be collected by the sales tax — Taylor believes much of the risk is mitigated.
The funding will be used to jumpstart a wide range of sales tax projects including several road resurfacing and repair projects, planning and construction of the SOWEGA Council on Aging's Senior Center, Thronateeska Heritage Center's archives and records building, and the three pedestrian walkways for Albany State University, Darton College and Albany Tech.
The funds will also be used to make sure the contractors are paid who have already started work at the Southwest Georgia Regional Airport where a new terminal is being built, and it will fund an upgrade of the local government's Information Technology system, Taylor said.
Ward V Commissioner Bob Langstaff commented Tuesday that the bonds will also allow the city to "lock in" the prices of productions used in construction; prices that tend to rise over time.
"Building materials like concrete and that kind of stuff tend increase in price, so if we approve this, we'd be able to lock in that price," Langstaff said.