Mayor hopeful council, commission go along with plan
Jackson Mayor Tony Yarber is hopeful the city council and one-percent commission will approve his plans in the coming weeks to issue a $90 million line of credit to pay for infrastructure improvements.
“The item has been tabled until the council meets with the commission,” he said. “It’s still very time-sensitive, and I hope we’ll get that meeting set up in the next week and a half.”
Yarber was referring to the city’s one-percent oversight commission.
The commission governs how Jackson spends a local option sales tax. Many of its members have been vocal opponents of the mayor’s desire to use one-percent funds as leverage for long-term debt.
Despite objections, Yarber told the council in February the city could use one-percent revenues for bond leverage even without the commission’s approval.
In response, the commission signed off on new rules in March, which, in part, require the city to obtain commission approval before using one-percent dollars on debt.
Lenders are wary of the contentious relationship between the commission and the administration.
“We interviewed a total of 11 banking firms, some Wall Street, some regional, some minority-owned ... all of which presented proposals. Most did not want to deal with the one-percent sales tax (as leverage), although we asked them to,” Robbi Jones, president of Kipling Jones and Co., recently told the council.
Kipling Jones is the city’s financial advisor helping the city with the loan.
Yarber said he is open to compromise, but would like to see a solution hammered out sooner rather than later. “This is a time-sensitive issue. The people I’m talking to in the street want to see things done,” he said.
Yarber is running for a second term and facing a stacked field in the May 2 Democratic primary.
The line of credit would work differently than a traditional bond. Instead of being given a lump sum up front, the city would draw down on the funds as needed. A plan for how the money is used would have to be drawn up, and signed off on by the council, the commission before the lender would approve it, Jones said.
Jones spoke at the special council meeting on April 7. She advised that the city might not get the full $90 million the mayor is seeking, but a smaller amount. One lender is currently offering the city $80 million. No hard date had been given at press time for when the city must accept the terms of the agreement.
She did not tell the council the name of the lender.
Plans are to use the credit to pay for construction on projects already approved by the commission, including the North State Street and West County Line Road projects.
Combined, the projects are expected to cost around $38.5 million. In 2015, Jackson received a $16.5 million federal TIGER grant to help cover the projects’ costs. The total amount of the award was increased to $19.5 million earlier this year.
Although not required under the grant’s terms, Jackson wants to have the full $38.5 million in the bank before the contract is bid out.
The final designs for the projects must be completed by June 7, and within two weeks of that, the projects must be bid out, according to Nick Bryant, a policy analyst with Kipling Jones. Construction must begin in September, and must wrap up by September 2019, he said.
The city brought on Neel-Schaffer to do the design work on North State, and to help obtain right-of-way, which is needed for the realignment of West County Line. Plans for County Line were drawn up by Neel-Schaffer years ago, but were shelved by previous administrations.
“We’ll have everything ready, as required by the Federal Highway Administration (FHWA),” Public Works Director Jerriot Smash said.
The TIGER grant was awarded by the FHWA. Terms of the agreement were also set by the agency.
In addition to TIGER revenues, Jackson has a $4 million commitment from the one-percent panel, as well as $5 million in other federal funds for use on County Line. All those funds combined, the city still comes up about $10 million short.
Ward One Councilman Ashby Foote asked why the city couldn’t simply borrow the $10 million.
City code requires leaders to have the full amount for the projects in place before a contractor is hired. Additionally, Jackson does not have the TIGER funds on hand, but will be reimbursed for them as invoices are submitted.
“The contractor will submit the invoice to us, we’ll pay it, and then send (the canceled check) to the state to review,” said Engineering Manager Charles Williams.
The state will deposit the money in the city’s account within 45 days, he said.
Some council and commission members are wary of issuing such a large amount for two projects. Ward Four Councilman De’Keither Stamps said many people in his ward don’t travel to North Jackson and therefore wouldn’t benefit from the work.
Commissioner Ted Duckworth believes the city shouldn’t take on long-term debt just because it’s received a federal grant. “That money could be better spent elsewhere,” he said.