The City of New Bern will seek a loan of $10 million to cover construction costs for the new Stanley White Recreation Center.
An agreement to finance the full construction of the building was unanimously approved by the Board of Aldermen during their September 12 meeting. As required by state law, a public hearing was held prior to the vote, during which no one spoke.
The board approved a resolution to enter into an installment financing agreement with TD Bank, a subsidiary of the multinational TD Bank Group. The plan calls for a loan not to exceed $10 million for a 15-year term at a rate of 4.50%.
According to Ted Cole, senior vice president and manager of public finance with Davenport & Co., the loan will consist of two components.
Component A will be a long-term loan of $6.5 million that represents the City’s local funding for the project.
Component B will be a $3.5 million loan intended to facilitate cash flowing to the project costs while the City waits for approximately $8 million in insurance money and financial commitments it has secured for the project from the Federal Emergency Management Agency (FEMA).
“The idea with component B was that it could be paid off early as the FEMA money is provided, although we have secured a long-term funding commitment with the ability to pre-pay it without penalty,” Cole told the board. “There’s some uncertainty of exactly how the FEMA money will flow, will there be any delays?”
Cole said with interest, total payback for the loan would be approximately $13.6 million — $8.7 million for the long-term loan and $4.9 million for the short -term loan, should it go the entire 15 years. He said the City’s maximum annual debt service, or the annual payment to TD Bank, would be just under $1.1 million.
The City’s agreement with TD bank required final approval from the NC Local Government Commission. According to City Clerk Brenda Blanco, the LGC gave that approval during their September 12 meeting.
The build up to the financing plan began last spring. In May, the Board of Aldermen authorized the execution of a $13,180,400 contract with T.A. Loving, a Goldsboro-based contractor, for construction of the new Stanley White Rec Center. That month the board submitted an application for a $950,000 Rural Transformation Grant originally intended for a planned Pepsi Museum to help with funding for the rec center construction. The city was not selected for the grant.
In July the board announced that while the City of New Bern had set aside more than half the money needed for construction of the new Stanley White Rec Center, an additional $6.3 million would be necessary to complete the project.
The City solicited financing proposals for the Stanley White Rec Center project to various banks for 15 or 20-year terms and received three responses. After reviewing the proposals from Capital One Public Funding, TD Bank, and Truist Bank, Davenport Public Finance recommended the City accept the proposal of TD Bank for a 15-year term, stating that the plan provided the greatest prepayment flexibility and was prepayable at any time without penalty.
Site preparation for the new Stanley White Recreation Center is currently underway at the construction site on 3rd Avenue across from the City of New Bern Fire Department.
The design calls for a two-story, 35,000 sq. foot building featuring two gymnasiums, offices and multi-purpose spaces on the ground level, along with an elevated walking track and fitness and weight room on the second floor.
By Todd Wetherington, co-editor. Send an email with questions or comments.