The Warrenton Board of Aldermen this month approved an agreement with a financial services agency to help the city prepare for to sell bonds to help reimburse the cost of improvements at the Shoppes …
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The Warrenton Board of Aldermen this month approved an agreement with a financial services agency to help the city prepare for to sell bonds to help reimburse the cost of improvements at the Shoppes at Warrenton mall.
The city is hiring WM Financial Strategies to assist with “the timing, structure, issuance and sale” of bonds to reimburse certain development costs at the mall and Rural King, according to City Administrator Brandie Walters.
The bonds, a type of loan, would be paid for by tax increment financing, or TIF. TIF is a system in which a portion of new tax revenues generated by a development are used to reimburse the cost of certain public improvements related to that development.
Walters explained that TIF bonds of up to $6 million will be used to reimburse development costs at the mall, fulfilling a years-old deal that enticed current mall owner Raul Walters Properties and the Rural King corporation to invest in Warrenton. The mall owner and Rural King were required to meet certain development and sales goals in order to qualify for reimbursement.
Walters said WM Financial Strategies will help the city navigate the bond market for this transaction. Joy A. Howard, the proprietor of WM Financial Strategies, has advised Warrenton for a separate bond issuance in the past, Walters said.
The financial advisor’s role will be to help determine the exact structure and timing of the financial arrangement with bond holders, with a goal of saving the city on interest payments to repay the bonds, Walters added. She said Howard will analyze revenue data from the mall and the length of time the stores have been open to determine what financial arrangements are available for the city.
The service agreement for WM Financial Strategies includes a fee of $150 per hour. If Warrenton proceeds to the sale of bonds, the agency would be paid $12,000, minus whatever hourly fees have already been paid. Walters said the cost of that service fee is part of what will be reimbursed by the TIF bonds.
According to the service agreement, the financial advisor has also offered to help Warrenton select the purchaser of the bonds (who the city would then pay back over time), and will assist in any negotiations or other preparation required for the city to issue bonds.
As part of the contract, WM Financial Strategies has also provided a assurance that it has no known conflicts of interest related to Warrenton’s sale of the TIF bonds.
