City of Hoover to borrow $85 million instead of $93 million due to premiums, discount

The Hoover City Council on Monday night gave its final approval to borrow $85 million to help pay for a new Interstate 459 interchange, an arts center and an estimated $20 million worth of improvements to the Hoover Met Stadium.

The city actually will receive $93.3 million by issuing warrants but only had to borrow $85 million because people buying the warrants paid $8.76 million in premiums to be able to do so, and the city received an underwriting discount of about $425,000, records show.

The city was able to get premiums on its warrants because of the city’s credit quality, the general market environment right now and investors’ appetite for the warrants, said Jason Grubbs, an investment banker with The Frazer Lanier Co., which is serving as the underwriter for the warrant issue. The sale is expected to close on or about Wednesday.

Of the $93.3 million the city will receive, the city plans to put $61 million toward construction of the new I-459 interchange (Exit 9) just west of South Shades Crest Road, $17 million toward a new arts center and $15 million toward improvements at Hoover Metropolitan Stadium.

The total cost of the new interstate interchange is expected to be about $120 million, but the state, using federal money, has agreed to pick up $59 million in construction costs. The cost of building the arts center is expected to be about $20 million, but the city is plans to pull about $3 million from other capital funds. Similarly, $5 million of other capital funds would go toward expected improvements at the Hoover Met.

To read more details about each of those projects, see this 280 Living story from March 7.

The city plans to make payments on this new debt over the next 20 years, but the city’s overall annual debt payments should drop from about $13.2 million to $13.1 million, Chief Financial Officer Tina Bolt said.

In other business Monday night, the Hoover City Council:

• Annexed 2.65 acres owned by South Central Bell Telephone at 5332 Old U.S. 280 (across from the Walmart Supercenter)
• Rejected a $2.9 million bid from Carcel and G. Construction to repair a road and dam on Lake Forest Circle in Riverchase because that was the only company to bid on the project. The city hopes to negotiate a lower price with the company, Chief Operations Officer Jehad Al-Dakka said.
• Amended the city’s new short-term rental regulations to allow short-term rental of residential properties (less than 30 days) in planned industrial zones as long as such use is approved by the Hoover City Council. Under a new ordinance approved Feb. 6, short-term rentals were prohibited in single-family neighborhoods (unless for special events and seven days or less in a calendar year) but allowed on property zoned for multifamily use such as apartments or condominiums unless a homeowners association does not allow them, as well as in general business districts, community business districts, neighborhood shopping districts, preferred commercial districts and special use districts.
• Hired On-Site Productions to run the SEC FanFest at this year’s SEC Baseball Tournament at the Hoover Met for an estimated $125,000.
• Rejected a $43,000 bid from NABS Creative to rent the city a truck-mounted LED video screen for the SEC Baseball Tournament because there was only one bidder for the service. The city will try to negotiate a lower price.
• Agreed to pay an extra $42,627 to Gillespie Construction for extension of a right-turn lane on Valleydale Road onto Jaguar Drive, putting the total cost of the project at $344,835.
• Agreed to allow Glass Panda to sell alcoholic beverages at 1031 Brock’s Gap Parkway, Suite 151.
• Declared a 2005 Cat Skid-steerm, three ice makers, three griddles, two deep fryers, a pool table and office chairs as surplus equipment to be disposed by donation, recycling or auction.
• Recognized the Hoover High School boys and girls basketball teams and indoor track teams for winning state championships this year and the Spain Park High School boys bowling team for winning second place at the state 7A bowling tournament.
• Recognized a delegation of legislators from Northern Ireland visiting the United States to learn about this country’s government and business practices.