New PBPD will cost $850K annually for 25 years

Annual payments for a new police department would be about $850,000, according to a recent presentation to Poplar Bluff City Council members.

The city is looking at an $11.6 million building constructed on Shelby Road.

The new building would be funded through the sale of certificates of participation, which would be subject to interest and repaid over a 25-year period, explained Jim Lahay, managing director for Stifel Financial, which will handle the sale.

Funds would be available in January, under the current schedule.

City council members are expected to vote Oct. 5 to move forward with the financing effort.

The total issuance would be $12,885,000. This would include an $850,000 debt service reserve fund, which would be used to make the last payment on the certificates. The money would be invested by a trustee until the end of the debt service, Lahay said.

Approximately $435,000 in remaining money would cover costs including legal fees, the underwriting and other fees associated with doing the financing.

Interest rates will be staggered based on the term for each set of certificates sold, but are expected to average about 3.5%, Lahay said.

“We’re trying to create level debt service, so each year, your debt service payments are the same,” Lahay said.

It will take 90 days for the financing process, which will begin in October and conclude in January, Lahay said.

“It’s important to me for you to understand this and be comfortable with it,” he told the council members. “It’s a big undertaking and I want you to make sure it’s done to your satisfaction.”

Residents speaking during a Monday city council meeting questioned the council about the project’s budget, what will be included in the building and how much of a payment the city can afford for this project. Additional articles Saturday, Sept. 26, and Saturday, Oct. 3, will look at other aspects of the police department and city hall projects.

__• How will the debt be paid?__

The debt will be paid for from the city’s capital improvement sales tax fund. It is projected to generate nearly $2.4 million in 2021, according to projections by city officials. Those estimates predict it will collect approximately $2.6 million in revenues by 2025, said city manager Matt Winters.

__• How much will the debt be?__

The city anticipates making a single payment on the police department debt in 2021 of $250,000. In future years, this payment will be $850,000 annually.

__• Can the capital account cover the police department costs?__

The capital fund covers costs related to building and equipment needs. This includes both debt payments for buildings and equipment, and the full cost for items such as new copiers, all the way to new police cars. Each department is allotted a specific amount annually based on their anticipated equipment needs for the year.

After debt payments, the capital fund is projected to have a remaining balance of (figures approximate): $1.1 million in 2021; $1.2 million in 2022; $1.8 million in 2023; $1.9 million in 2024; and $2.2 million in 2025. The figures were provided by Winters.

These balances do not include any payments for either the city hall or police department projects. The balances reflect the end of some current debt expenses, and projected small increases in sales tax revenue, said Winters.

__• Debt already covered by the capital fund includes:__

• Payments to Eight Points developers. These payments are based on a percentage of the overall capital improvement sales tax collected and vary from year to year. They are projected at $300,000 in 2021, of which the city may receive up to $45,000 back.

• A transportation loan for improvements to Oak Grove Road. The city has two remaining payments of $537,675 each in 2021 and 2022.

• A loan for a fire truck. This debt has four more payments, ending in 2024. Payments are decreasing, with $103,414 in 2021 and $100,124 in 2024.

• A loan for technology equipment. Payments for this debt also end in 2024, with decreasing payments. They are $230,579 in 2021, decreasing to $214,911 in the final year.

• A loan for a street sweeper. One payment remains in 2021, of $43,201.