BENSON — Benson City Council is considering approval of a proposed $3.5 million bond issuance to help finance a new city hall facility and infrastructure improvement projects throughout the community.
During a Sept. 14 worksession, council members listened to a presentation from a Stifel, Nicolaus & Company, Inc. representative regarding a potential municipal securities transaction for the city at an exceptionally low interest rate of 1.8 percent. The bond would be used for such projects as the new city hall, park improvements, street repairs and other “quality of life enhancements.”
As part of the bond issuance, City Manager Vicki Vivian talked about refinancing the city’s current bond debt to take advantage of the “more attractive, almost all-time low interest rates.”
Vivian explained that the city is currently paying more than 4 percent interest on the current bond, a $400,000 annual payment due to expire in 2030. By refinancing the existing bond at the 1.8 percent rate and moving forward with the $3.5 million bond, the city would be making an annual payment of $450,000 through 2038.
If the city opts to refinance its current bond, money saved through the lower interest rate could be used to fund some of the infrastructure projects, said Vivian, who noted that the community has expressed an interest in park improvements, a splash pad, street repairs and a dog park.
A new 3,500-square-foot modular building the city recently purchased from Fort Huachuca will serve as a temporary city hall until the new facility is built. Vivian is recommending that the modular building be used as an annex to the new city hall, which would reduce the size and scope of the original building plan from 14,000-square-feet to 9,000.
The modular building once served as Fort Huachuca’s temporary veterinary hospital until a new veterinary facility was built, said Brad Hamilton, Benson City Works Director and Engineer.
“This is a very well built, well insulated building,” he said. “We’re currently looking at proposals from an architect for redesigning the inside to make it more suitable as a tcity hall.”
Along with the new floor plan, the city to make changes to the building’s exterior, with a facade and new paint, as well as landscaping the lot, Hamilton said.
Once the modular building is ready for use, the old city hall building will be demolished and rebuilt on the existing site, with a more solid, modern foundation, Hamilton said.
Located directly across the street from Benson’s city hall complex, both Vivian and Hamilton are pleased about the building’s potential uses.
“The modular building changes what we need for our city hall,” Vivian said. “We could turn the modular building into council chambers, conference rooms, offices, meeting rooms and a mayor’s office as an annex.”
The construction estimate for the revised plan, with markup costs factored into the project’s total cost, comes in around $3.2 million. The original, much larger building estimate was around $5 million.
Mark Reader, Managing Director at Stifel, Nicolaus & Company said that restructuring the city’s current debt by pushing it out eight years would give the city $267,000 in “present value savings” because of the much lower interest rate. It’s money that could be used toward the other infrastructure projects the city hopes to complete.
“If you are going to do this, it’s an ideal time,” Reader said.
When councilmember Larry Dempster expressed apprehensions about entering into a “line of credit” situation, Reader explained that the bond is not a line of credit, but a fixed-rate, low-interest bond issuance for the purpose of achieving certain policy objectives, with the new city hall as a top priority.
At the Sept. 14 worksession, council agreed to give Reader verbal direction to move forward with the necessary credit rating and paperwork, representing the first step in the bond issuance process. Reeder will need to bring the paperwork back to council for approval.
With the general election drawing near and uncertainties about the presidential outcome, Councilmember Barbara Nunn recommended expediting the bond process in order to take advantage of the exceptionally low interest rate.
Mayor Toney King agreed, noting that it would probably be in the city’s best interest to complete the issuance process prior to the election.
Reader said he would work with Vivian and city staff to move forward with the paperwork so it could be presented to the council expeditiously, possibly through a special meeting.