Leader Blues

Wednesday, July 02, 2008

TOP STORY > >Board asked to pursue funding for golf course

Leader staff writer

Sherwood took a step closer to having its funding in place when a jury later this month tells the city how much it will have to pay for the 106-acre North Hills Country Club it condemned earlier this year.

In a pair of specially called council meetings Monday and Tuesday, aldermen unanimously voted to support a resolution calling on the Sherwood Public Facilities Board “to pursue alternatives for financing acquisition” of the golf course property.

Monday’s short meeting was called for the public-facility board to meet and work out financing for the golf course, but set no specific amount.

The council met again Tuesday morning to pass a second resolution requesting the facility board to come up with financing “from $3 million not to exceed $6 million of tax-exempt revenue bonds or other evidences of indebtedness for the purpose of providing funds to finance the acquisition, construction, improving and equipping of recreational facilities.”

The members of the facility board are Jack Wilson, Forrest Penny, Linda Napper, Bob Dawson and Bob Franks.

The recommended funding mechanism discussed at a June 24 workshop for the council was to use a bond issue and a sizeable down payment taken from the city’s reserves or other available sources.

Tim Grooms, one of a number of attorneys working with the city to acquire the defunct golf course property, said at the workshop that the city should have $1 million ready for a down payment and be ready to issue bonds for up to an additional $5 million.

Grooms said the appraisals on the property run from just under $3 million to more than $5 million. There’s also the possibility that the jury will make the city pay the owners’ legal costs.

City Attorney Stephen Cobb said if the amount the jury decides is too high, the city can just walk away and let Club Properties retain the property. What amount was considered too high was not clarified during the workshop. But it was made clear that if the city backs out of the condemnation that action would more than likely result in another lawsuit.

Mayor Virginia Hillman said that the down payment suggestion was a lot of money. “That’s half of our reserve fund,” she said, adding, “That’s a lot if we don’t have much.”

A $5 million bond issue, according to attorney John Bryant, one of the attorneys working on the bond issue, would cost the city about $500,000 a year for 20 years.

On top of that is a possible damage payment the city may have to make to the golf course owners if a federal lawsuit is decided in favor of the owners, and the money needed to make improvements to the acreage.

Alderman Becki Vassar suggested during the workshop that the land could be used to build a water park similar to Jacksonville’s Splash Zone, which cost about $2.5 million to build four years ago. Jacksonville funded the water park’s construction through a sales tax increase.

Grooms said the city’s public facilities board needs to meet as soon as possible to initiate the bond issue request to pay for the property.

“Then a public hearing needs to be scheduled with 10 days notice, and then the city council needs to approve the bond issue, including the down payment and monthly payments,” Grooms said, adding that all of that should be in place before the condemnation issue is decided in a jury trial late next month.

Tuesday’s short council meeting started the ball rolling.

Under the procedures that the city used to condemn the property, the fair market value that the city will pay the owners, Club Properties, must be decided by a jury trial.

That trial is set for July 24-25 and July 30-July 31. The first two days are for legal wrangling, and the last two days will be the actual jury trial to determine the fair market value.

Grooms said the city could get by with less than a $1 million down payment, but a smaller payment could negatively affect the rate and terms of the bond issue. “The equity credit markets are as tight as I’ve seen them in my lifetime. A 20 percent down will help with rate and terms,” he said.

Bond attorney Joseph Gregory told the workshop attendees that the city’s public facilities board would actually buy the golf course land through the bond issue and lease it to the city. The amount of the lease should cover the bond payment, Gregory said.