A Jackson consultant presented McComb officials with options on general obligation bonds as a way to cover the city’s share of matching funds on various grant-funded road repair projects.
“McComb, over this past year, has had a number of projects come up,” Demery Grubbs of Jackson-based Government Consultants Inc. told officials in a meeting Thursday. “And in those projects and with certain grants y’all had, y’all had to come up with certain match money to make sure those projects or grants were done.
“In doing that, obviously putting that money up will impact your overall general fund budget. In that process, we’ve gone back and looked to see if there’s a way we could potentially bond for those match monies versus just pulling it out of your general fund.”
The city’s share of matching funds for the projects is more than $1 million.
Mayor Zach Patterson and selectmen Robert Maddox, Danny Esch and E.C. Nobles did not attend the meeting.
Grubbs addressed the remaining three selectmen, board attorney Wayne Dowdy and city administrator Quordiniah Lockley with six different scenarios for a general obligation bond, including:
• A $1.48 million bond repaid over 10 years will cost the city $178,000 annually to pay it back at 3.5 percent interest.
• A $1.48 million bond repaid over 15 years that will cost the city $133,500 annually to pay back at 4 percent interest.
• A $1.75 million bond repaid over 10 years that will cost the city $210,000 annually to pay back.
• A $1.75 million bond repaid over 15 years that will cost the city $157,000 annually to pay back.
• A $2.5 million bond repaid over 10 years that will cost the city $301,000 annually to pay back.
• A $2.5 million bond repaid over 15 years that will cost the city $225,000 annually to pay back.
The city has $1,423,000 in bond-eligible projects. The cost of issuance would bring the bond cost to $1.48 million.
“If you wanted to borrow the money, and use that money to make the matches, you could do that,” Grubbs said. “Once you borrow the money, you can use it for purposes you normally would in your general fund.”
The projects involving matching grants include:
• Old Liberty Road bridge replacement project, using Local System Bridge Program Funds. The city’s share is $34,500.• A project to repair drainage and overlay Peoples Street, and overlay Moses Lane. The city’s matching portion is $52,750.
• A watershed protection project for Holmes Street, Adams Street and Apache Drive. The project requires a 25 percent match of $43,750 from the city.
• An American Recovery and Reinvestment Act mill overlay project for Magnolia Street, Locust Street, Pearl River Avenue and Summit Streets. The city’s matching portion is $271,375.
• The installation of traffic signals at the intersection of Locust Street and Pearl River Avenue. The city’s matching portion is $200,000.
• A project to correct a drainage problem on Brenda Travis Street in the Baertown Community. The city’s matching portion is $50,000.
• A U.S. Army Corps of Engineers stormwater grant project that involves a number of drainage projects throughout the city. McComb’s match is $783,649.
Grubbs warned selectmen that if the annual payments could not be met by the city’s general fund, state law would require a tax increase.
On the 10-year, $1.48 million bond issue, existing property taxes would increase by 1.87 mills. On a 15-year, $1.48 million bond issue, the rate would increase by about 1.41 mills.
“Of course, the board is very much aware that citizens don’t like tax increases,” Lockley said.
The good news is that payment on a $2.28 million bond for an old street improvement project will be completed in 2012, freeing up some money for the bond that is under consideration.
“When it rolls off, you’re going to have some money to pay this debt,” Grubbs said. “It’s one of those things you might want to do right now, or it might be something you want to wait to do.”
The city does have the capacity to go with one of the larger bond options to take on additional improvement projects.
McComb has an overall bonding capacity of $14.7 million and $4 million in outstanding debt. This leaves the city with a $10.6 million debt capacity.
If the selectmen vote to use a bond, it will take between 90 and 120 days to get the money, barring petitions for a referendum.
If 10 percent of qualified voters or 1,500 people sign file a petition, a referendum will be necessary. The bond would need 60 percent of the vote to be approved.
