TREASURE ISLAND — City commissioners took the first step, on what promises to be a long road, to purchase the Allied Specialty Insurance Building on Gulf Boulevard for a City Hall-Municipal Services Complex.
During their regular May 21 meeting, commissioners authorized staff to seek issuance of a bank note or loan, not to exceed $8 million, and initiate a bond validation process for the City Hall Purchase and Renovation Project. A final vote is scheduled for June 4.
“This is just the very first step to permit staff to proceed with acquisition of financing,” said Amy Davis, assistant city manager and finance director. During further negotiations and site plan design, which takes place later in the process, the city will determine whether it wants to use all four floors of the building or lease offices in the structure.
“A purchase agreement has not been finalized yet, but to preserve the timeline we ask the City Commission to move forward with this item,” Davis advised commissioners.
City Manager Garry Brumback told commissioners city officials are still in the negotiation phase.
He estimated buying the Allied building will cost the city $6.35 million, with renovations adding about another $1.6 million to the costs.
The city manager said it would not be possible to remodel the current city hall because according to FEMA rules, the city would have to elevate it.
“This is a total tear down,” he said, “and we’d end up having to build new anyway. We believe and have all the data to support this is least expensive way to provide a new facility.”
Mayor Larry Lunn said after the current City Hall building is demolished, his desire would be to convert the property into a waterfront park that could include about 40 boat slips.
“We would have an opportunity to have events in a waterfront park that we can’t have on the beach,” he said.
The mayor added the city “worked diligently to make a frugal investment of your funds.”
The current City Hall building “is not capable of being rehabilitated; it has so many problems, you could not renovate and have to tear it down and start over.”
In commenting about the Allied building the mayor said, “I always felt it looked like a governmental building; it shows a much higher level of professionalism by having this kind of facility.”
Commissioner Saleen Partridge said in considering all the other options “this seemed to be by far the best investment for the city in the long run.”
Commissioner Tyler Payne said in considering the $20 million price tag estimated to build a new city hall, this $8 million option provides a great benefit to the city.
To purchase the four-story glass office tower at 10451 Gulf Blvd., the city will seek an $8 million loan to acquire and renovate the property. Assistant City Manager Davis advised that sometime in September or October the city will determine how it wants to finance the project and then seek lenders, which could include banks or the state’s revolving loan program.
“In working with our financial adviser, staff has determined that issuance of tax-exempt debt through a bank loan is the most appropriate vehicle for raising funds,” Davis told commissioners.
To begin the process of obtaining a bank loan, the city has to approve an ordinance authorizing the issuance of the note and declare a desire to begin a bond-validation process, which was done Tuesday night.
“A bond validation process is voluntary,” she explained.
Before the issuance of the loan a court determines “that the note, the project financed, and the source of security are valid.”
The bond validation process is expected to take approximately four months to complete, including a 30-day appeal period.
Davis explained the interest rate will be determined by resolution of the City Commission in October. The loan term will not exceed July 1, 2035.
While the bond validation process is occurring, the Finance Department together with the City’s financial adviser solicit bank proposals for a loan, she added.
At a September or October public hearing, the commission will be presented with a supplemental resolution to an ordinance to approve a bank and loan. An anticipated closing would immediately follow, Davis said.
“Staff is currently working with the financial adviser to determine the best financing options that will comply with the city charter as well as represent the best value for our citizens,” Davis said.
“It is important to note that the city will not be required to raise taxes. It could raise non-ad valorem revenue instead and or reduce expenditures,” Davis said.
It is expected that the first year’s millage rate increase will be included in the proposed fiscal year 2020 budget.