CRA Moving Forward With Bonds to Fund Connected Plan
Effort Expect to Transform City Center, Increased Investment and Property Values
Last updated 7/15/2022 at 12:28pm
Money to fund the extensive Lake Wales Connected plan has not been threatened thus far by rising interest rates, according to a presentation to the city commission sitting as the board of the Community Redevelopment Agency. The CRA is anticipating issuing bonds to raise about $18.5 million to fund the transformational project.
After hearing a report from Will Reid, representing the city's bond counsel firm of Ford and Associates, commissioners had plenty of questions about the potential impact to the planned redevelopment project. Reid outlined the gyrations that have impacted the lending environment due to sharp interest rate increasing imposed by the Federal Reserve,
The Fed this week raised the interbank rate by 75 basis points, or three-quarters of a percent, exceeding market expectations. The move is intended to rein in inflation.
Reid explained that, while costs have risen during the process, it's still likely that the city will receive a sustainable deal. The bonds are being underwritten by Raymond James, guaranteeing the sale. That firm will then be marketing the tax-exempt securities, primarily to institutional clients.
Local financial expert Pat Cain, himself a former city commissioner, has no role in the process, but admitted that "it's a shame we didn't get this done six months ago" when interest rates were at rock bottom. He pointed out that "rates are still historically low," and said that CRA was smart to press forward.
City Finance Director Dorothy Abbott, who had advised commissioners not to pursue the quicker route of shorter-term bank financing, assured them that there was still plenty of reserve to fund the increased costs that will result from higher rates.
Abbott told the board that, based on preliminary numbers, she expected revenue to the CRA to rise by "two hundred to two hundred and fifty thousand" for the coming fiscal year, continuing a long-term trend. The increased costs of the bonds resulting from the rate increases thus far amount to an estimated $135,000. "We're still within a balanced forecast," she said. "In fact, we're a little bit ahead."
The CRA will repay the bond money through an existing revenue stream of more than $2 million annually. Those funds are a portion of county and city taxes "captured" by the CRA from property taxes within the CRA boundaries. As property values increase the "tax increment" rises.
The bonds will fund work to renovate many blocks of city streets, creating new traffic patterns, wider sidewalks, and lush landscaping. The project will focus on Park and Central Avenues, and many blocks of First Street. That work is expected to further increase the value of properties in the district.
The award-winning multi-million-dollar design, developed by city planners Dover Kohl and Partners, has already received support in the form of an $800,000 federal grant arranged by Congressman Darren Soto, while a second million-dollar grant to support the Northwest Neighborhood sidewalk and streetscape project is pending. The first grant will help fund improvements to Orange, Crystal, and possibly Tillman Avenues.