Warrenton will use bonds to pay Rural King, mall developers

Adam Rollins, Staff Writer
Posted 1/17/22

The Warrenton Board of Aldermen has approved the use of bonds to pay off economic incentive funds the city owes to developers of Rural King and the Shoppes at Warrenton mall.

Since 2018, Warrenton …

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Warrenton will use bonds to pay Rural King, mall developers

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The Warrenton Board of Aldermen has approved the use of bonds to pay off economic incentive funds the city owes to developers of Rural King and the Shoppes at Warrenton mall.

Since 2018, Warrenton has had an agreement with the Rural King corporation and the developer group that owns the mall to use tax increment financing (TIF) to reimburse some of the cost of redeveloping the mall. TIF is a system by which the city uses part of the tax revenue generated by Rural King and other new stores at the mall to reimburse part of the cost of development.

In this case, the 2018 agreement obligates Warrenton over time to pay $5 million to Rural King and $1 million to the mall developer as long as those entities meet certain economic performance metrics. Notably, if TIF revenue ever falls short of payments owed under the agreement, Warrenton is obligated to use other city funds to make up part of the difference. As one example, the money could be taken from the general fund that pays for a variety of city services, including street repairs and policing.

Public finance attorney Mark Grimm, the city’s advisor for the TIF agreement, told the board of aldermen on Jan. 4 that they can avoid that pitfall and protect the city’s finances by using bonds, a form of loan, to completely pay off the city’s obligations to Rural King and the mall.

Essentially, the city would be exchanging a debt to the mall developers for a new debt to bond holders. But under the new bond, the city would never be forced to use extra revenue to pay its debt, Grimm said.

“The advantage of doing this bond issue to pay down that amount is it would completely eliminate the city’s obligation to use non-TIF revenues to pay the debt,” Grimm explained. “That would be phenomenal, from the city’s standpoint, to know that whatever happens with Rural King or anything else over the next 20 years, (the obligations) are only payable from the TIF revenue, not from any other revenues.”

Aldermen voted 4-0 on Jan. 4 to pursue the bond plan. Aldermen Jack Crump and Larry Corder were absent. The vote allows city representatives to work with an underwriter to market the bond agreement to potential financers. A final bond agreement would be approved at a later date.

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