Joe Hornaday
The Lincoln Street Reconstruction Project continued down the road to reality this week, as the Tax Incremental Finance (TIF) Board investigated funding options for the enterprise.
John Julien of H.G. Umbaugh presented the board with an update on the funding proposals for the Lincoln Street Project. Julien explained that the project was getting into the phase where financing will be needed, utilizing information he was given by HNTB.
The final estimates for the project were in, Julien said. He suggested that the TIF board make determinations on how to proceed soon.
Julien provided two ways to fund the Lincoln Street Project, but suggested utilizing a “bond anticipation note,” or a BAN. The BAN, Julien explained, acts as a bridge loan and takes care of the temporary funding needs. Julien had prepared an analysis of the methods for payment, and said that an advantage to using a BAN was that it could be used to perform the financing before the construction bids are received. A BAN, Julien added, would reduce capitalized interest and would more than offset bond and BAN financing. It would reduce the size of the long-term bond, and help the TIF board to end up borrowing exactly what they need. It also would provide the opportunity to reduce the amount of long-term borrowing, with increased flexibility. Julien explained that using a BAN did have one downside. The flexibility in the BAN analysis considers no change in interest rates. Julien said that if interest rates were to go up, it would ultimately work against the TIF board. If rates were to go lower, the TIF would benefit. With the BAN, rising interest rates could be offset by locking into long-term financing.
Julien suggested that the TIF reach a decision by at least early August. He added that the project was in a position to move forward with all the processes at the local level.
“It should be a pretty streamlined process,” Julien said.
TIF Board president Ken Dornich was the first to express his support of the idea. Board member John Schmalenburg briefly inquired about administrative costs, which Julien said would not be different. Dornich noted that he felt it was a win-win situation.
TIF Board member Lowell Rethlake was also in favor of the proposal, but said he would prefer to have the money up front. His support, he said, was contingent upon H.G. Umbaugh closely watching the interest rates.
Christina Colon of HNTB briefed the TIF Board on the schedule for the Lincoln Street Reconstruction Project. She said that everything was still on schedule, and that the August letting for the project was still set. Colon explained that she was not aware that Duke Energy had begun the utility relocation requirements, but vowed to follow-up and find out Duke Energy’s schedule.
“There’s not a tremendous amount going on right now,” Colon said of the project.
Street Commissioner Mark Klosterkemper next updated the TIF Board about the LOI’s for Lincoln Street. The committee investigating the letters had met last week, Klosterkemper said, and were given homework. The committee intends to get together next week to go over what they had accomplished and found out. At that point, they could score the LOIs, which would then be tabulated and presented to Greensburg’s Board of Works.
“So far, everything seems to be going pretty well,” Klosterkemper said.
Moving forward, Dornich pointed out that he had received a letter from H.G. Umbaugh, advising him that there was a law passed that says the TIF Board must notify city and county taxing units of the funds captured. Dornich said that sending those entities a letter was more of a formality than anything else, and that he was preparing to send the letter out. It required his signature, and the board approved it unanimously, minus Darrell Poling who was absent.
The $3.2 million in erroneously captured TIF funds was also on the minds of the board members. That money was to be redistributed by the taxing authorities. Dornich explained that the excess revenue captured in the TIF area is to be dispersed to the taxing authorities. The letter drafted explains that there is no excess money going back to the taxing entities, Dornich said.
At the request of Mayor Gary Herbert, the TIF Board examined a proposal for their own Web page on the city of Greensburg’s site. Herbert thought it was important that each governing body have their own site, and Herbert said he hoped it would help keep everyone informed. Dornich agreed, stating that it was important to have since the Lincoln Street Project was getting off the ground. The board would be charged a one-time $150 fee. The motion to get the Website going died without a second, and Lowell Rethlake explained that it might happen later on.
Before adjourning, the TIF agreed to pay the bills, including one to HNTB for $57,564.80. Mayor Herbert asked the TIF Board to begin examining where the future road extension needs to take place. Prospective commercial properties are hoping for an approved plan. Herbert said the board would have to decide where it will be, whether on Freeland Road or North Broadway or somewhere else.
About $90,000 has already been spent on a Freeland Road study.
“I think we need to resurrect that and continue that process,” Dornich said.
Herbert said finding the best place in the community for the extension was imperative.
