While some aldermen seem intent on moving forward with a $2.55 million-maximum purchase of Cadence Bank’s Main Street location, a financing issue could manifest in the middle of the month: Starkville has yet to receive bids on surplus property needed to pay for the structure.
City officials confirmed Friday that Starkville has yet to receive bids for its current administrative home and lagoon property in the northern portion of the town.
The sale of at least one of those properties is seen as crucial to keeping the potential purchase revenue neutral. Starkville listed City Hall and the lagoon after appraisals placed the properties’ values at $800,000-$900,000 and $420,000-$600,000.
Officials said they would use $1.3 million in certificates of participation left over from the prior administration’s City Hall construction project to pay for a portion of the purchase, but the board previously expanded the once-shunned financing scheme to a $3 million-maximum to cover the transaction and expected renovations.
Aldermen previously bemoaned the financing tool as a financial burden. Unlike general obligation bonds, COPs do not directly authorize tax increases for debt retirement. Those payments must come out of the city’s budget.
“We are hopeful we’ll get some competitive bids in. From a cash flow standpoint, that is very important, in my opinion,” said Ward 5 Alderman Scott Maynard, who also chairs the city’s budget committee.
The lack of revenue sources could kill the Cadence deal outright, but the expanded COPs give aldermen flexibility if they wish to address shortcomings and transform City Hall into Starkville Police Department’s outright home.
Maynard previously lobbied for due diligence studies with the Cadence purchase, saying he did not think the $1.3 million originally earmarked in COPs could renovate City Hall to its fullest extent.
Rough estimates suggest the money would quickly be spent on improvements, including an elevator, that would make City Hall compliant with the Americans with Disabilities Act, Ward 3 Alderman David Little said. Save for a façade upgrade and interior painting, little additional work is expected to be completed with the original financing plan.
“(If a sale does not occur), we’ll probably need to continue looking at what we have and what fits within our existing resources,” Little said. “Selling one or both of these properties is a big piece of the puzzle. We’re at the point where the clock is ticking.”
For months, Ward 4 Alderman Jason Walker stumped for more-intense due diligence studies — programming and renovation costs; expected utilities; and predictions for SPD’s growth — associated with the proposed purchase.
He was the only alderman last month to vote against expanding the COPs. Walker took exception to what he called his peers’ intent to purchase the property without understanding how future costs will affect Starkville’s bottom line.
“If City Hall and the lagoon don’t sell, I don’t see us buying (Cadence). It would be ridiculous to even attempt it then,” Walker said.
But the board has shown some ability to cut potential costs and develop revenue streams for the building. Aldermen first showed interest in moving Starkville Municipal Court into the facility but nixed the idea after a seven-figure price tag was estimated for the programming’s renovations.
Aldermen also expressed a desire in allowing Cadence to maintain operations of its drive-thru teller. Such a move is expected to draw a minor amount of monthly revenue.
Some representatives even asked if a commercial operation like Cadence could operate more of the first floor, but SPD Chief Frank Nichols said security concerns would grow in correlation to an outside tenant’s space requirements.
“(Architect) Gary Shafer is looking at both buildings (City Hall and the Cadence property) to see what the true renovation costs are for each. I’m not convinced we can renovate the existing building for $1.3 million, and that’s the item everyone is really waiting on,” Maynard said last month.
The inability to find a buyer for the lagoon property does not trouble Walker, as he said the surplus space is an invaluable asset for future growth.
“There’s no public park space in the northeastern portion of Starkville. This property could easily fit the need of future expansion of our park system,” he said. “We already own it, and that knocks a lot of expense out of the way in the future for such an expansion.”
Little also said he sees the merits of holding onto the lagoon property for future growth. Its location would afford out-of-town visitors access to hotels and restaurants, he said.
“That’s prime real estate in a growing area,” Little said. “Going in the direction we’re going with our city and our park system, I think we need to be looking in that area, especially since some of our parks are getting older. It’s a good, viable location.”
The bidding process is expected to conclude Feb. 12.
Carl Smith covers Starkville and Oktibbeha County for The Dispatch. Follow him on Twitter @StarkDispatch
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