The city of Beaufort might restructure debt on the Henry C. Chambers Waterfront Park to improve its cash flow and ensure the city can maintain the park and downtown area in the manner it does now.
Council recently discussed issuing a 15-year bond of as much as $3.5 million, backed by hospitality- and accommodations-tax revenues. The bond would be used to consolidate two existing loans with BB&T.
The city borrowed $3.5 million in 2005 and another $1.5 million in 2007 from BB&T to help pay for park renovations.
Beaufort pays $463,000 a year on the debt and is scheduled to make payments through 2022, city manager Scott Dadson said.
Restructuring the debt would help the city lower its annual payment by about $150,000, Paul Trouche, the city's bonds counsel, told City Council members last week.
"Some of that is true savings (because of a lower interest rate) and some is just because you're lengthening the term of the debt," Trouche said.
The proposed refinancing would not affect accommodations-tax grants the city awards every year, Mayor Billy Keyserling said.
The city can still use the same funding stream it does now to pay the debt, Keyserling said.
A tax increment finance district that helps pay for maintenance of the park and downtown area will expire in 2012, heightening the need to lower debt payments, Dadson said.
In that tax-increment financing district, or TIF, growth in property tax revenue is used to redevelop the area. Beaufort County government and the Beaufort County School District both participate in the TIF, forgoing some revenue that goes instead to the city for improvement projects. When the TIF expires, the city will no longer get that extra money.
"Refinancing (the debt) is another way to free up future dollars so we can continue to maintain our assets," Dadson said. "Yes, you pay for it longer, but it cash-flows out better."
Although set to expire in 2012, the city has discussed extending the TIF another 15 years. But both the county and school district have said they will not participate beyond 2012, Keyserling said.
Keyserling said the city should continue pushing for the county and school district's participation.
"I really, quite frankly, am not ready to let them off the hook," Keyserling said at a meeting last week.
City Council members likely will continue discussion Tuesday on issuing the bond.
Follow staff writer Juliann Vachon at twitter.com/EyeOnBeaufort.