Council borrows $1M to finance new city shop

News Staff Writer

Atmore City Council members passed during their Monday, April 27, meeting a resolution authorizing issuance of $1 million in financing warrants to pay for construction of a new city shop. The vote was 4-0, with one councilman abstaining.
The construction project’s financing was the only topic on the council’s agenda during the panel’s fourth teleconference meeting of the COVID-19 pandemic. Participating were Mayor Jim Staff, all five council members, City Clerk Becca Smith and City Attorney Larry Wettermark.
The council had voted in December to apply for funding from the United States Department of Agriculture’s Rural Development financing program, which is available to cities or towns with a population of less than 20,000. Approval of the financing package was given by each council member except District 3’s Chris Walker, who is a vice president at United Bank and did not vote.
United Bank will serve as the local lender and provide the money — an estimated $956,400 — for the proposed 50-feet by 136-feet metal building. The project will also include new access drives and parking space for the city’s streets and sanitation department headquarters. The cost estimate does not include relocation of utilities or landscaping but does include $41,900 as contingency funds to cover cost overruns or unanticipated costs that might crop up.
Walker explained in December that the USDA financing route would be much less expensive than a bond issue, which has numerous up-front costs.
The city clerk reported after the meeting that the loan would be paid back at 3.55 percent interest. The first year’s payment will be interest-only, with a 10-year amortization to follow.
The new building won’t serve as collateral for the warrants; the city’s taxing power will. Under Section 11-47-1 of Alabama law, municipalities may pledge “license taxes, ad valorem taxes or other revenues due or to become due within 12 months from the date of the note or warrant” to secure repayment of the loan.