Tooele City plans to bond for approximately $7 million at an interest rate of about 2.5 percent to build a new police station on Garden Street behind City Hall.
The city will first try to obtain money through a loan from the Utah Community Impact Board (CIB) Fund. If that is not approved, it will seek money through other public market financing options, according to Jason Burningham of the City’s financial consulting firm of Lewis Young Robertson & Burningham of Salt Lake City.
Burningham said he is confident that Tooele can obtain the loan through the CIB Fund.
“The CIB is a state agency that leases land to companies for mineral rights. These loans are used for rural projects,” he said. “We’ve had initial contact with CIB and they have a healthy fund balance. We’re optimistic because many agencies seek grants through CIB, but this would be a loan.”
Burningham also is optimistic because a police station is considered an “essential facility” for a municipality.
Council Chairman Steve Pruden said Tooele has used CIB programs in the past to fund the construction of City Hall, the library and swimming pool.
“We’re trying every way we can, with every tool that is available, to save as much money as possible and still achieve the end result,” Pruden said.
He said the CIB Fund would provide lower interest rates than other methods of financing.
The city would like to begin construction on the new building next spring, according to Mayor Debbie Winn.
Birmingham said the CIB loan process takes a bit longer than other financing methods.
“We need to get the application in by Oct. 1 and then meet with the CIB Board in November or December,” he said. “The money should be available sometime in February.”
Tooele City plans to hold a public hearing at City Hall on Sept. 26 to unveil the financing plan to the public as required by CIB.
The City Council also acts as the city’s Municipal Building Authority, and it recessed to an MBA meeting during the City Council meeting Wednesday night to authorize, approve, execute and deliver a master lease agreement between Tooele City and the MBA of Tooele City. The resolution included other parameters.
“This lengthy resolution covers all our bases and gives us a lot of options,” Pruden said.
Burningham said Tooele City would lease the new public safety building from the MBA of Tooele City.
The building should cost about $8.54 million, according to a chart provided by Burningham, but the maximum principal of the loan is set at $9 million to include some flexibility related to construction contingencies, plus additional land acquisition at a cost of about $150,000.
Tooele City is able to pay $1 million toward construction from its capital projects fund and $700,000 from police impact fees. The total amount necessary to finance would be $7 million, according to the chart.
The parameter for the maximum life of the loan would be set at 32 years. Burningham said Tooele City would pay 0-percent interest on the loan during the construction phase anticipated to last 18 months to two years. Interest charges would begin after the facility is built.
To help pay for the new public safety building, the City Council adopted an 82-percent certified property tax rate increase over last year’s rate after a Truth-in-Taxation hearing at City Hall on Aug. 15.
Tooele will raise an estimated additional $2.1 million this year with the rate increase, according to estimates provided by the city.
A chart provided by the city shows $458,364 of the extra money raised this year is earmarked to pay on the bond for a new public safety building.