Fayetteville to borrow from internal fund to build baseball stadium

March 22--Fayetteville officials say they plan to borrow $9 million from the city's Risk Management fund to help finance their baseball stadium.

Because the state's Local Government Commission won't let the city finance bond debt for 30 years as first sought, city officials had to revamp how they intend to retire $31 million they will borrow through what are called limited-obligation bonds.

On Tuesday night, the City Council's Baseball Committee got its first look at the new financial model for building the downtown ballpark.

Now, the city proposes to retire the bond debt in 20 years. They will use the $9 million from the Risk Management fund to help make the bond payments.

Once the bond is retired after 20 years, the city then will begin repaying, with interest, what was borrowed from the Risk Management fund using other city sources.

The new plan anticipates that repaying the Risk Management fund will take 10 years, stretching the city's overall debt obligations to 30 years as first proposed last year.

"We are basically using the Risk Management fund as a line of credit to be able to service the (bond) debt over 20 years," said Councilman Kirk deViere, a Baseball Committee member.

The city uses its Risk Management fund to pay its insurance costs.

The city has made this arrangement before, borrowing from the fund and then repaying it with interest from other city funds.

Tracey Broyles, the city's Budget and Evaluation director, said that under the new financial model, the city would pay $2.7 million in debt retirement in the first year after issuing the bonds. The payments would decrease every year, to $1.7 million when the debt is retired in 20 years.

The city's plan last fall called for spreading the bond debt over 30 years, with an estimated $1.6 million annual cost.

The annual city costs will grow for two reasons: The interest rate since then has risen, and the city would retire the debt over a shorter period.

The committee members liked the plan.

"All right, that's great work, finance team," said the committee's chairman, Mayor Pro Tem Mitch Colvin.

The city has yet to finalize a contract with Bartow Malow of Charlotte to build the stadium, and the council has not adopted a master development agreement with private investors of Prince Charles Holdings LLC of Durham, who now own part of the land where the stadium will go off Hay Street. The council could approve both deals at its next regular meeting Monday.

The city hopes to break ground this summer and open in 2019, when a minor league team owned by the Houston Astros would begin playing.

Staff writer Andrew Barksdale can be reached at [email protected] or 486-3565.

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