MASON CITY – As the layers are peeled back on the $36 million downtown development project, the costs to the people of Mason City start to become exposed.
Last week, NIT reported that the city will pay $8 million in interest over the life of the $18.75 million in bonds the city council and mayor approved on November 3 for the possible $36 million downtown development. The project – which is still in limbo – includes a hotel (first promised in 2013); a parking ramp; an arena and a pavilion (upgraded additions Southbridge Mall, owned by US Bank); and a mixed-use building.
City officials have repeatedly claimed that taxpayers will never pay for this project, even as city leaders anxiously await a possible $7.1 million in state funding and $18.75 in general obligation bonds have been purchased.
However, one question to the city’s finance department revealed this additional $8 million interest cost to be shouldered over 20 years.
One former Mason City elected official told NIT, “the whole city is “TIFF-ed out. There’s hardly anything left. Once this deal goes through, there won’t be any TIFF (tax increment financing) left for anything else. Just look at a map of the TIF districts.”
Today, NIT asked a second question: In regards to the $18.75 million bonds for the downtown development, “what is the cost to the city to actually do the bonding? We are paying a bonding company to create/sell/manage the bonds … what is the cost to the city to do that?”
According to our award-winning city finance department, the answer is $20,000.
“The cost for bonding varies slightly for the Financial Advisor and the Attorney,” Finance Director Kevin Jacobson said, “but our last issue for approximately $1.3 million cost a little over $20,000. It should be in that range as well for this possible issue.”
Following up, NIT asked Mr. Jacobson, “where does the $20,000 come from? Is that paid right away or over time?”
“That would be included as part of the bond issue. My report shows the cost of the project, and then includes bonding costs and potential contingencies. We normally pay that after bond proceeds come to the city,” he explained. “Speer is our Financial Advisor and Ahlers does our bond legal work.”
Mr. Jacobson said “it usually takes 30 days to get the money”; in this case, $18.75 million. He is waiting for City Administrator Brent Trout to give him the go-ahead.
He said that as soon as the money arrives, the city “would start paying on the parking ramp and pavilion as that is what is expected to be the first projects started.”
