Starkville is well-positioned to pay for the multimillion-dollar Cornerstone Park project, city officials say, despite an expected sales tax revenue shortfall this year due to the COVID-19 coronavirus pandemic.
“We are early enough in the development of it that if we had to make changes, we could, but I think we had a sound financial plan going into it,” Ward 2 Alderman Sandra Sistrunk said. “Even with this setback, (which) is going to be more than a few months, it’s still a sound financial plan. I may worry about a lot of things, but this one doesn’t have me so worried.”
Golden Triangle Development LINK CEO Joe Max Higgins told the Columbus Rotary Club at its Tuesday meeting that funding the Cornerstone Park recreation complex off Highway 25, estimated at between $18 million and $22 million, is “kind of a problem” at the moment. Sistrunk, the board of aldermen’s budget chairperson, and Mayor Lynn Spruill disagree.
“We’ve pushed those payments out three years so we will have an opportunity to hopefully make up the sales tax (revenue) we’ve lost and put us in a better position to pay off those bonds over that duration and we’ll be back from the loss,” Spruill said.
Starkville added 1 percent to its existing 2-percent restaurant and hotel-motel tax in August after it passed a public referendum in May and the board of aldermen in June. The tax was meant to support the construction of Cornerstone Park and maintenance and capital improvements at existing parks.
Aldermen voted in February to issue up to $25 million in general obligation bonds for park improvements, including Cornerstone construction, and Spruill said $14 million have been issued so far. The repayment term is up to 30 years.
The bonds sold above face value, so the city has $15.4 million on hand to spend on Cornerstone construction, Sistrunk said, and the deadline to issue the remaining $11 million in bonds is sometime next year.
The only bond payments due for the next three years are interest payments, which the city is prepared to pay, Sistrunk said. The annual payments will continue to be small until 2028, the year the city is scheduled to pay off older construction bonds for the Starkville Sportsplex, and then they will start to increase, she said.
“We kept our payments lower until that debt paid off, and then what we’re paying annually toward that debt service can switch over and be used for the Cornerstone Project,” Sistrunk said.
Additional costs for bond issues — such as fees for consultants, underwriters and legal counsel — usually add up to about 3 percent of the total issue, Sistrunk said.
The city has issued two contracts for the project so far: $4 million in dirt work that is underway right now, and a design contract that will total between $1 million and $2 million.
Sistrunk said she would be surprised if the city sold all of the remaining $11 million in bonds it can issue for parks projects by the deadline next year, but it might be able to sell some of them despite the precarious economic climate caused by the pandemic.
“As we sort through what our finances are going to look like, we’re trying to be very conservative in planning for this project in terms of available dollars,” Sistrunk said.
The board approved a series of cost-saving measures in April, including city staff furloughs and a hiring freeze, to mitigate what Spruill predicts will be a $1.3 million sales tax revenue shortfall due to the pandemic.
Timetable for the work
The Cornerstone work will be finished before the city addresses any other park projects, which might have extended timelines for completion since the Parks and Recreation department is scaling back its operations during the pandemic, Spruill said.
So far the pandemic has not delayed the Cornerstone construction schedule, interim parks director David D’Aquilla said. The design process is set to be completed in June or July, and the department will meet with the city then to determine if any aspect of the project’s budget needs to change, he said.
“From a timetable, everything is still where it needs to be,” D’Aquilla said. “We’re not looking to bid construction until the fall.”
The city could make small month-by-month adjustments to the project’s budget as time goes by to keep the total cost “closer to $18 million than $22 million,” Sistrunk said.
She said she has seen public interest increase for parks and recreation amenities over the past few years.
“I’ve been very pleasantly surprised at the number of conversations I’ve had in three years about the demand for more sidewalks in the community,” she said. “That tells me that people do want to be out and engaged, and I think that’s just a shift in the services that the city provides in the future.”
Tess Vrbin was previously a reporter for The Dispatch.
You can help your community
Quality, in-depth journalism is essential to a healthy community. The Dispatch brings you the most complete reporting and insightful commentary in the Golden Triangle, but we need your help to continue our efforts. In the past week, our reporters have posted 37 articles to cdispatch.com. Please consider subscribing to our website for only $2.30 per week to help support local journalism and our community.