A Columbia-based attorney and bond law specialist is helping city leaders put numbers behind a spending plan that could be used for capital upgrades at Greenwood’s fire department headquarters and public works facility.
Lawrence Flynn, of Pope Flynn Group, spent nearly an hour with the City Council Monday night walking through financing options — including possible tax hikes — as officials consider floating a multi-million dollar general obligation bond for needed repair jobs.
Since cities are limited in how they can borrow money, taking on general obligation debt is a common practice to help local governments pay for various projects, and it’s secured based on a community’s credit rating.
“This is putting a mortgage on every piece of taxable property in your community,” Flynn said. Under state law, cities can borrow up to 8% of its total assessed value, giving Greenwood room to borrow up to $4.5 million based on its $56 million assessment.
Flynn said the city has outstanding loans of $600,000, leaving $3.9 million worth of debt capacity. The number could go higher, but that would require a voter-approved referendum since doing so would exceed the 8% cap.
Flynn laid out several “hypotheticals” of how that could be paid down should city leaders opt for a $3 million repayment plan.
Over a 15-year span and assuming an interest rate of 4%, the council would have to add nearly 4.8 mills annually to the property tax rate. If the term was cut to 10 years, the property tax burden would jump by 6.5 mills a year.
“I know that City Council has given us the leeway to sort of start putting all the pieces together. We feel like we are now in a place to come to you and say, ‘we are ready for council to consider approval of this,’” City Manager Julie Wilkie said.
Later this month, the council is expected to vote on a $25,000 outlay that would retain Flynn as the city’s bond counsel as Davis & Floyd moves forward with creating a master plan – pegged at just more than $24,000 — to give city leaders a scope of cost for construction of larger public works bays and enhanced sleeping and restroom facilities at the Main Street fire station, among other priorities.
“We don’t want to expend any funds until we know that City Council is ready to move forward,” Wilkie said.
Wilkie said it should take about 90 days for the engineering analysis to be completed.
“We’re going to ask them to estimate what we want, and then we’re going to back into the number that council’s comfortable with,” Wilkie said.