AM commission delays decision on lot purchase

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.”

One thought on “AM commission delays decision on lot purchase

  1. John Chambers

    Of course everyone would like to control as much as possible in our city with respect to future development but one must recognize what their limitations are especially when it comes to finances. The city’s budget for the 2010-2011 fiscal year shows $2.1 million and change for total annual revenues. The purchase price of the six lots on Pine and North Bay Blvd. is supposed to be $2.8 million but that excludes associated expenses and any interest if there is a ten year note which is one of the options presented by our proposed financial advisor. That would add another $1 million or so, nearly two years worth of the city’s annual revenues. The city’s vision statement for this parcel lists the intended uses to be for parking, festivals and “could include, but are not limited to, charging stations to support the use of electric cars, a bandstand or clamshell to support the festivals and music venues, the planting of ‘showcase’ native vegetation, and the possible future relocation of historic structures as deemed appropriate.” Does this sound like the uses have been well thought out or even identified yet? Are these uses worthy of spending something just short of 20% of our budget over the next 10 years? Are there no other projects that are more important to us such as better drainage, safety on our roads, bridges and beaches, better enforcement of our laws and ordinances, equipment replacement in the Public Works and Administration departments, etc? Also, the mayor has said the reserve fund is down to 20%. Can we really afford this significant expenditure at a time when the economy is forcing all levels of government to cut spending? Frankly, I feel we can find more economical locations to charge electric cars and plant showcase vegetation. Parking may be needed but is there not a more affordable alternative? Do we need that much parking and is it the city’s responsibility to provide all of it? I realize the county owns it, but is there not another much larger park just across the canal from the proposed park? If we must have a festival, why not close part of the street for a day?

    With all due respect to Commissioner Aubry, to “get the property first” and then work on uses, design and financing is definitely putting the cart before the horse.

    I urge the Commission to act responsibly and do their due diligence with respect to this project and determine if the park is really necessary. We are in economic times where non federal governments should be proceeding cautiously and cutting expenditures where possible, which follows the lead established by the State of Florida. Patience is a virtue and committing to any purchase or hiring attorneys, bond counsels and/or financial advisors is ill-advised until our vision is intelligently considered and appropriately approved.

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