The City of Mobile was surprised to learn during the March 5 city council meeting that J.P. Morgan Securities bought the $250 million in bonds that will finance the new Civic Center.
Scott Collins, the city’s executive director of finance, said there were eight bidders for the bonds and that J.P. Morgan was the apparent low bidder. He said his office had a conference call with J.P. Morgan to confirm the sale, and that there will be a slightly smaller interest rate.
“It does appear that we have saved some money on the interest rate and that the sale is complete,” he said. “We anticipate having the $250 million in our possession within 10 days.”
“There was a lot of anticipation when we opened the bids,” said Mayor Sandy Stimpson. “That’s a huge step in the right direction for this project because of the interest you’re going to pay over a long period of time. PFM (the financial planners for the city of Mobile), held our hand the whole way, and they teed this up.
Stimpson said that because the anticipated interest rate on the bonds—around 4.3 percent—turned out to be lower, the payback could be lower.
“That’s great because it helps the cash flow on the payback,” he said. “We’re not sure how much exactly the interest rate will be, but it may be less than four percent. When you’re paying back $250 million over 20 years, that’s significant.”
Meanwhile, Stimpson was disappointed that the county had not yet committed to paying for the arena. While Commissioner Randall Dueitt has favored contributing to the project, Commissioner Merceria Ludgood has opposed it because the arena does not include a theater.
While the city considered an agreement for the county to chip in $10 million over two years, there’s no indication that the county will contribute anything at all.
“We had approached them some months ago with a request, but they couldn’t get to a point where they were comfortable,” Stimpson said. “They have the opportunity to do something; it’s not unusual for us to disagree what the exact amount is. Until we get a definitive no, I think there’s still an opportunity out there, and I hope they participate.”
Courtesy of Call News.
