The city of Beaufort might borrow almost twice as much money as it needs to buy the Beaufort Commerce Park.
The city has agreed to buy the park for $1.85 million, but officials are now considering issuing up to $3.5 million in bonds to pay for the it and fund other projects, officials said during Tuesday night's city council meeting.
Finance Director Kathy Todd said interest on bonds is "very cheap" -- three percent -- and proposed the city borrow between $2.5 million and $3.5 million for either 10 or 15 years.
The city has $1.033 million in a land acquisition fund to put toward the park purchase price,
"I wouldn't recommend ... depleting that cash, just because money is so cheap," Todd said.
City council voted to buy the 209-acre park -- 167 acres of which are buildable -- from S.C. Bank & Trust during a special meeting April 3. It has 60 days from that vote to complete the purchase.
If the city borrowed $2.5 million, annual payments would be $293,000 over 10 years or $209,500 over, Todd said.
Payments on $3.5 million in bonds would be $410,307 over 10 years or $293,183 over 15.
Looking at those numbers, council members began discussing other projects, either already in the works or proposed, that involve buying land. Those purchases could be funded with the additional bond money, officials said.
"Wow," councilman Mike Sutton said. "So you can borrow a million more for ($83,683) a year. So what capital do we need for the next 10 years?"
He asked city staff to compile a list of projects that could be paid for with the bonds. Council would not have to immediately decide how to spend the money, but it would need to be spent within three to five years, Todd said.
Councilman Mike McFee suggested officials focus on current projects that have anticipated funding shortfalls.
The city has made annual deposits -- averaging about $250,000 -- into the land acquisition fund for the last four years, Todd said. Those deposits could be directed toward any new bond payments without affecting the city's budget, City Manager Scott Dadson said.
Any profits from land sales in the park could only be used to repay the bonds, Todd said.
Developer Merrittt Patterson pointed out the park's long history of struggling to find occupants, and said the city will need a back-up plan if businesses do not buy parcels and the land acquisition fund is depleted.
"The bill will come due whether you have any income or not," he said. "And given the history of that park -- because there is history -- that is possible."
Dadson said staff would look into other repayment options if that scenario occurred.