By JOSH NEWTON
City officials established the Tahlequah Public Facilities Authority Thursday as the next step in a $21 million capital improvements project, and expect money for the upgrades to be available sometime next month.
Trustees of the authority – City Councilors Linda Spyres, Maurice Turney, Jack Spears and Diane Weston, along with Mayor Jason Nichols – then approved a resolution to incur debt through sales tax revenue bonds. Weston was absent from the meeting that established the authority, its meeting dates, and its professionals.
Jeff Raley, of Floyd Law Firm, said the resolution authorizes up to $25 million in debt.
“I will tell you that we’re not going to incur that much debt,” Raley said. “It looks like now we will probably have around $22 million. We like to authorize more because sometimes the market moves in our favor, and if it does, we would be able to issue a little more debt and get a lower interest rate, and basically save [the city] money. So in order [to not have to] come back and do this again, we shoot a little bit high. But it looks like now, from the interest-rate market and what we project, that we will issue around $22 million.”
Nichols said the interest rates were initially estimated at around 3.11 percent when the project was being discussed, but it has now increased to about 3.34 percent. Attorneys said Thursday there’s a chance the interest rates could fall again before the bonds are sold.
Nichols explained the figure of $21 million was used when the plan was put before voters, and that amount was for the cost of the actual projects.
“But with fees and interest and those kinds of things, it obviously goes up above the amount,” said Nichols.
Raley said the city ballot put before voters last month estimated the $21 million amount, but “we also provided in there that we could pay issuance costs and costs of debt service and that type of thing.”
Aside from the $21.1 million the city expects to spend on the several projects included in the recent plan, at least half a million dollars will be spent on professional services related to the bonds.
Floyd Law Firm out of Norman will receive 1 percent of the value of the bonds, for a total estimated fee somewhere between $220,000 to $250,000. Stephen H. McDonald & Associates, also out of Norman, will receive .85 percent to act as the TPFA’s financial adviser. That could add up to anywhere from $187,000 to $212,500.
Tahlequah attorney Park Medearis, who is the city council’s attorney, was selected as TPFA’s attorney. He will receive .5 percent of the debt amount, which would total from $110,000 to $125,000.
The authority will also pay a fee to an underwriter – D.A. Davidson & Co. – to help with the sale of the bonds; that projected amount was not immediately available Thursday.
Nichols said no bidding process was necessary to select the professionals who were hired.
“These are people we have had experience with,” said Nichols.
He said several local entities have used the same professionals in other projects, and that the Norman-based entities provide services not commonly found within Oklahoma.
“They are experts in their field and trustworthy, and they do us a good job,” said Nichols.
Selection of the city attorney – Medearis – to act as the TPFA attorney is a standard process, much like the selection of the city’s clerk and treasurer to act in similar capacities for the authority, Nichols said.
The mayor said the professionals hired by the city plan to have all necessary work completed for the bonds, so funding will be “in the bank” sometime in March.
Nichols said this will provide the city with money to begin the projects, even though the tax increase of three-quarters of a percent won’t begin to be collected until April.
As sales tax revenue is provided to the city from the Oklahoma Tax Commission, the city will make payments against the money it has borrowed, he said.