In its work session meeting Monday evening, the Harlem City Council discussed the prospect of financing two major upcoming projects—the public works building project and the multi-purpose park.
City attorney Barry Fleming explained to the councilmembers that by borrowing funds toward these projects, the city stands to potentially save $100,000 or more, since municipal bonds are not federally taxed.
“If you’re sitting on a few million dollars… you can leave that money in the bank, go out and borrow the money here,” said Fleming, noting the increase in interest rates as of late. “The difference between what you can make over your investment could add up to a big savings for the city.”
Fleming also mentioned the possibility of utilizing the Georgia Fund 1, the State of Georgia’s investment pool for counties, municipalities and other authorized entities, noting the city’s approximately $4 million set aside for the projects could gain interest of more than 5%.
In a presentation on the prospective investment, Andrew Tritt, managing director with Atlanta-based investment banking company Stifel Financial, said that Harlem could use any lawfully available funds to pay the debt service, without any liens or encumbered dollars in a particular account.
“It’s not like a home mortgage where you put the deed to the bank and that’s the security,” said Tritt. “This is just the full faith and credit of the city.”
Tritt offered his estimates to the council, saying the city could spend the money on its initiatives within three years, with a final repayment on the debt in 2029, with Regions Bank providing the lowest bid at roughly 4% interest.
Most of the council supported the proposal, after a further Q&A between Tritt, Fleming and the councilmembers, though Mayor Roxanne Whitaker expressed misgiving about the city entering into debt, and city manager Debra Moore expressed concerns about the rate.
No vote was officially taken on the issue, but the councilmembers all indicated to Fleming their support, so that he could begin procedures with Tritt’s firm. The council is scheduled to vote on project financing for the public works and multi-purpose park projects in its meeting on Monday, Nov. 27.
Skyler Q. Andrews is a staff reporter covering business for The Augusta Press. Reach him at skyler@theaugustapress.com.
