LARGO — Highland Recreation Complex is one of the crown jewels in the city of Largo. But, as of last week, the 40,000-square-foot facility on Highland Avenue looks even more beautiful to the city’s finance officials.
That’s because the recreation complex that opened in June 2013 is now debt-free. According to Finance Director Kim Adams, the final debt payment has been made on $16,937,000 in loans for construction of the complex.
The loan was taken in two parts in December 2011 and January 2012, with interest rates of 1.71% and 1.72% respectively, and was repaid from the Penny for Pinellas sales tax.
Adams said paying the loans off in less than 10 years was the plan from the start.
“One of the things we do is we don’t overextend,” Adams said Oct. 24. “The city of Largo I think does an excellent job borrowing conservatively. We tend to borrow for a very short time, and we pay it back quickly.”
As evidence of that, Adams pointed out that the final debt payment on a $10 million loan for construction of the Largo Community Center will be made in December.
That loan was taken out in March 2010, carried a 3.44% interest rate and, once again, will be repaid entirely by Penny for Pinellas.
“It’s nice to be debt-free on those two very heavily used city assets,” he said.
Adams said the loans were excellent decisions, but they weren’t easy ones to make coming out of the wake of the recession.
“The old Highland complex was very old,” he said. “It was built in the early 1970s and needed a lot of repair. So, keeping it running and patching things just wasn’t practical. It was really pouring good money after bad.”
The recession, however, actually made the decision to move forward an easier one, Adams said, citing two reasons: low interest rates and plenty of available contractors.
“It was really the best of all worlds,” he said. “It was very good pricing from high-quality firms to build it, and very low interest rates to finance it. And we had Penny for Pinellas coming in.”
He said the Community Center was a similar situation, but the fact that the Goodman Group donated the land was too good a deal to pass up.
“The City Commission looked at different locations and said, well, that’s a pretty good location,” he said. “And the price for the land was right at zero. The value of the land was, if I recall, approximately $3 million.”
Adams said the decisions were wise because if the commission waited, the price tag would’ve certainly gone up.
“I know we saved a lot of money,” he said. “Probably millions of dollars by constructing those projects when we did. Not only in the cost of the project, but in the financing. So, it really was the perfect time to construct those projects.”
Penny paying off
What also made the decisions easier was the Penny for Pinellas, which allowed the city to finance the projects without raising property taxes.
The tax that was extended through 2030 by voter referendum in 2017 also will pay for several future projects.
Adams said the roughly $100 million the city is expected to receive through 2030 has already been allocated to certain focus areas, such as stormwater and transportation, but it could change for specific projects.
Some of those expenditures will likely include police and fire rescue vehicle replacements, citywide roadway improvements, new playgrounds, $12 million for a fire station reconstruction program and $3 million for the Bayhead Action Park and Complex reconstruction project.
The Penny can’t pay for everything, though, and the city has some costly projects that will require borrowing.
In addition to paying off the two facilities, the city also this past week paid off $3 million that was used to refinance a wastewater loan.
Adams said the majority of times that the city has borrowed, it has been for big-dollar wastewater projects. For instance, over the past four years, the city has undertaken more than $100 million in capital projects funded through the State’s Revolving Loan Fund, which carries just a 0.73% interest rate.
Also, the commission is expected to be asked to sign off on another roughly $53 million state loan with a 0.5% interest rate Nov. 5. That money will be used to make improvements to the Wastewater Biological Treatment System at the plant.
Adams said city commissioners don’t make these decisions lightly and deserve praise in how they’ve handled the city’s borrowing over the years.
“We propose and they dispose,” he said. “They’re a thoughtful group and they always act in what’s in the best interest of the city.”