With an Aug. 15 deadline for Anna Maria city commissioners to tell Blackhawk Bank of Iowa whether it will purchase six vacant lots at the Pine Avenue-Bay Boulevard intersection, Commissioner Gene Aubry said “time is of the essence.”
At the commission’s June 30 worksession, Aubry said discussion of potential uses of the six lots is important, but “we can talk about that as we go. Let’s move as quickly as possible.”
Commissioner John Quam had opened a meeting last week with some draft drawings of uses for the six lots and urged discussion, but Aubry was ready to commit to the purchase.
He was ready to vote to allow Mayor Mike Selby to contact Blackhawk Bank immediately to say the city would agree to purchase the lots, but other commissioners suggested restraint.
“Everybody’s got to know what or how we are going to use (the lots),” Commissioner Dale Woodland said.
“I’m not comfortable with a purchase agreement without knowing specifics,” he said, and a noticed public meeting should be held before any vote. “We can’t vote on something and hope it comes out right.”
According to the mayor, Blackhawk Bank has offered the six lots to the city for $2.8 million at 3.75 percent interest for 10 years, with no payments the first two years. After those first two years, the city can pay interest only for the next eight years while it seeks funding. If only interest is paid until the balloon payment is due at the end of 10 years, the total price would be $3 million. The bank wants an answer by Aug. 15.
The bank said the terms would allow the city two years to find funding sources, either public or private, without having to make a payment.
But Woodland said he was not sure that was the only financing possible, particularly after government finance expert Jim Gollohan presented other options for the commission to consider, including getting another bank to join Blackhawk in an amortized loan for a longer term, or asking banks to bid on financing.
Gollohan also said he considered the present Blackhawk offer a “risky proposition” for the city because no one knows what interest rates will be in 10 years.
However, resident and developer Mike Coleman pointed out that the Blackhawk deal is not permanent at 10 years. The city can always insist on a prepayment clause with no penalty.
Gollohan said one option is to seek an amortized loan. The city has enough in guaranteed revenues to make monthly payments on such a mortgage without difficulty, he indicated. “You just paid off a loan with a $225,000 a month payment,” he said.
He suggested the city retain his firm and financial attorney Judson Freeman to look into other options and attempt to structure a deal beneficial to the city, and their fees would come from the loan proceeds at closing.
City attorney Jim Dye said the commission should authorize the mayor to negotiate with Blackhawk and any other financial entity and suggested retaining Gollohan and Freeman because government financing is a “highly specialized area and we need their advice.”
Not so, indicated Aubry. “The main thing is to get the property first, then set up a commission” to work on uses, design and financing measures. Otherwise, commissioners will still be talking about the six lots “months from now,” he said.
Commissioner Jo Ann Mattick, who chaired the meeting in the absence of Commissioner Chuck Webb, did not yet favor a vote to make the purchase.
Even though the deadline is seven weeks away, Mattick believed there would be enough time to “fast track” discussions and get an agreement by Aug. 15.
Commissioners voted 3-1 to authorize Selby to continue negotiations with Blackhawk, while at the same time work with Gollohan and Freeman on other options. Aubry voted against the motion.
Selby said he would call Blackhawk and ask if the bank officials were interested in a 20-year fixed-rate amortized loan.
Commissioners agreed to hold a short meeting before their July 7 budget worksession to hear the mayor’s report on Blackhawk and any options Gollohan and Freeman have to offer.
By the July 14 regular commission meeting, Mattick said the mayor “should have something we may vote on, and we will have public discussion.”