City rationale on bonding issue

There have been many comments in the community, both positive and negative, regarding our decision as a staff and city council to pay the bonds on the Commander building at the airport rather than to rebond. I want to explain the rationale behind that decision and the reason that those decisions were made in a relatively short period of time.

Our city has experienced an unusual financial hardship in recent years with the failure of the Commander project and the failure of a secondary buyer to secure funding during an extended period of time. Our necessary bond payments of $260,000 have continued to be made from current city operating budgets. We also have been limited in marketing that building due to bond requirements that it house only aircraft manufacturers.

Our first opportunity to rebond this debt and lessen the tight occupancy requirements is April 1. The next opportunity to make decisions on the bonds would have been Oct. 1. It was our intention to follow through with this process, issue new bonds, give notice to the tenant to vacate, and actively begin marketing the building for a new tenant. This timing coincided with the receipt of $2 million from the Isle of Capri per our developmental agreement in which we sold and transferred city owned land needed for their project. Those funds were restricted to $1 million for the amenities on the Broadway street project and the balance used for specific capital projects per council direction.

It became apparent to the city staff and council that there was an opportunity to temporarily reallocate the majority of those funds ($1,693,500) to pay off the bonds which would result in the airport building being free and clear. This would save the taxpayers approximately $45,000 in bonding fees and annual bond payments (interest and principal) of some $260,000. It would also remove all restrictions for occupancy other than those required due to being on airport property.

We were in immediate contact with officials at Isle of Capri to explain our thoughts and future plans. They are in agreement with our decision as we continue to strive to be good stewards of taxpayer funds. We are dedicated to follow through with all of the original commitments of the developmental agreement with Isle. We will, in effect, repay ourselves those reallocated monies and restrict them to their original intention and commitment.

The following is our plan that was submitted by staff and approved by the council:

* Pay bond balance in entirety $1,693,500

* Replenish the city emergency fund with balance $306,500 per developmental agreement

* Pay saved money back to a restricted account to replenish reallocated funds. This would include the bonding costs, annual bond payment amounts, plus income generated through any successful grants that we may seek for the projects.

* Proceed on schedule with the entire Broadway project with an estimated completion date of October 2012 prior to the casino opening of December 2012. We would temporarily use existing TTF (Transportation Trust Fund) cash flow and/or grants to complete this project on time.

* The restricted account would first be used to repay any funds used from the TTF-4 account. Once that is paid, the balance would be used to complete the other committed council projects which have never had a set time frame for completion.

I have been active in TTF for over 15 years and we have been very diligent in using those taxpayer funds only for pre-approved street projects. This decision, as explained above, does not vary from that commitment. We are very proud of the results of TTF and the confidence of our citizens as we are now into TTF-4.

I trust that this better explains the rationale behind our decision. This was strictly a business decision that is in the best interest of our taxpaying citizens.

Harry Rediger is the mayor of Cape Girardeau