One of the bonds is used to finance the Lakeside Marketplace retail complex within the Tax Allocation District, and by refinancing at a reduced term and lower interest rate the city will realize savings of about $2 million. The second bond was issued 10 years ago by the city’s Downtown Development Authority to fund the construction of City Hall and Acworth Sports Complex, and refinancing now at a lower interest rate will provide savings over the bond’s life of about $291,000.
The aldermen had much praise for city staff working with Gordon Mortin, managing director of independent financial adviser Raymond James, who helped secure the lower rates and reduce long-term costs.
The TAD bond was originally to go until 2029, but the debt has been refinanced to be paid off in 2025 at a reduced interest rate of 2.53 percent, down from 6.75 percent, Mortin said.
“It’s hard to remember (Lakeside Marketplace shopping center) was a construction debris landfill and there was no significant development north of that,” Mortin said. “And you look at what’s happened there: It’s been a great revenue generator. This is the classic example of how a TAD is supposed to work.”
Georgia’s TAD designation was created as an economic development tool for cities to finance projects to remove urban blight — such as the landfill that was previously at the Lakeside Marketplace site — by attracting development to these designated areas.
Acworth secured bonds to finance these improvements through the “tax allocation increment,” or the increase in property tax revenues resulting from the 350,000-square-foot shopping center development that now boasts a Super Target.
“Our TAD is operating exactly as it should,” City Manager Brian Bulthuis said. “We’re having excess revenues every year.”
Bulthuis said the increment over the base property tax revenues peaked a few years ago at $27 million and revenues are now at about $23 million over the base. The incremental funds are paid back to the city, which then uses the money to pay off the bonds with the excess split between Acworth, the Cobb County School District and the Cobb County Commission, per the original TAD agreement.
The bond covering City Hall and the sports complex was issued 10 years ago and will be paid off in 2023.
The refinanced interest rate has been adjusted to 1.74 percent, resulting in a savings on average of about $30,000 per year.
“In my 43 years, this is bottom of the market,” Mortin said.
The total cost to refinance the City Hall and sports complex bond is about $3.4 million. City Manager Brian Bulthuis said the DDA met Tuesday night and approved all of the documents.
Bulthuis clarified that the savings from the TAD will not all go to Acworth, as it has about a 20 percent share of the TAD, with Cobb County School District receiving about 57 percent and the remainder going toward Cobb County per the intergovernmental agreement.
“This is not only a benefit to us, this is a benefit to our schools and the county, but we’ll see it (paid off) in 2025 instead of 2029,” Bulthuis said.
The cost to refinance the TAD bond is almost $6 million. Mortin said the higher cost is because the refinancing has taken a year and is almost twice the size.
“It’s been extremely hard to get done but you can obviously see the benefits in the level of savings,” Mortin said.
Bulthuis said he was proud of the work done both by city staff, City Attorney Doug Haynie and Mortin.
“This was a huge undertaking to get these refinanced and our timing in the market I don’t think could have been better because in my 25 years of doing this I’ve never seen (interest rate) numbers like this,” Bulthuis said.
Mayor Tommy Allegood was not present at Thursday’s meeting, which was conducted by Mayor pro-Tem Tim Richardson.
The board also approved the fiscal 2014 budget of $11.4 million with no one speaking out during the public hearing.