Jonesboro, AR – (JonesboroRightNow.com) – Feb. 12, 2025 – Financing for the Jonesboro Sportsplex gained approval Monday after two meetings held by the A&P Commission and the Jonesboro Public Facilities Board.
According to attorney Michelle Simmons Algood, of the Mitchell Williams Law Firm, they were recommending a legal structure that mimics a landlord structure in the commercial world.
The A&P Commission would be responsible for managing the project’s construction, Algood said. Then after it is constructed according to that lease, they will operate the facility and pay rent to the Facilities Board.
“The Facilities Board will use that rent that is paid to be the source of repayment for the bonds,” Algood said. “The bonds that the Facilities Board intends to issue will be lease revenue bonds. Currently, we anticipate the structure would be a private placement with a single bank purchaser. So, rather than a public offering of bonds, which was vetted, we looked at those different options that we could have used. We’re going to have a private placement, and we do anticipate that those bonds will be eligible for a tax-exempt interest rate, which means a lower cost of financing for the project.”
According to Cheryl Schluterman, director of Raymond James, they analyzed various financing structures and was able to obtain an interested lender, Capital One, which had favorable terms and interest rates.
“One of the reasons that Capital One was the preferred lender from those that we had talked to is they were very flexible and there’s a better rate than what we could get in the public market. They are allowing us to prepay if any funds aren’t spent and we’re working through the details just to be clear on the terms,” Schluterman said.
A term has not yet been signed, although the plan is to have a rate locked in by March 5.
Jonesboro Advertising and Promotion Commission Chair Jerry Morgan asked, with the resolution calling for the principal amount not to exceed $70 million [a high estimate], why the borrowing target was set at $63 to 65 million.
“We typically do that just to cover in case something crazy happened,” Schluterman said. “If you all needed to borrow more, it allows you and us the flexibility to not have to come back and do this again. So yeah, we typically set it high, somewhere that we know we won’t hit.”
Depending on the amount that is borrowed and the interest rate at the time, she said they were looking at somewhere between 21 and 23 years to pay.
Morgan then noted that they started the collection of the prepared food tax in 2022 and would not have to borrow 100 percent of the cost.
“We’ve already paid for two tracts of land totaling over $5 million, and we’ve paid over $3 million in architectural fees. So, we’ve spent almost $8.5 million over that three-year period for this project, which has given us the ability again to pay it back quicker because we’re not having to borrow 100 percent,” Morgan said. “That’s a good ability that we’ve been able to do. And we’ll also have some cash to use in the project to on the front end to keep interest rates down.”
Schluterman also noted that they were looking at March 18 to close.
The resolution, which was passed unanimously, acknowledged receipt of information from the JPF Board relating to the Board’s financing of the Sports Complex Project and consented to the Board entering into negotiations with the potential purchaser for the terms of the bonds and the structure and terms of the lease.
Afterward, the Public Facilities Board began their meeting to consider a preliminary resolution authorizing the bond issue to move forward on the terms presented to the PFB.
During this meeting, the JPF Board was presented with two appraisers to help determine a fair market value of rent of the Sports Complex to the Commission. These included Colliers International at an estimated cost of $8,500 for their appraisal services and Ferstl Valuation Services at an estimated cost of $30,000.
Ultimately after reviewing the two proposals, the Board chose Colliers as their appraiser for the project due to its lower cost and time of three weeks to make the appraisal.
The Board was also presented with four options for bond trustees, including Centennial Bank, Simmons Bank, First Security Bank and Regions Bank.
Centennial Bank was then selected as the bond trustee due to having the lowest annual fees with Regions Banks chosen as the backup bond trustee.
Before reading the resolution, Algood noted that this was a preliminary resolution and once the final terms have been negotiated, they would have an interest rate locked in before coming back to the board and requesting a final authorizing resolution.
The bonds will be identified as City of Jonesboro Public Facilities Board lease revenue bonds and will be designated to Jonesboro Sports Complex Project Series 2025. The bonds can be used for three purposes: design, construction and equipment costs for the complex; funding a debt service reserve fund; and funding for the issuance costs.
Algood added that the parameters that they will be working within as they negotiate the documents include a not-to-exceed principal amount of $70 million, a not-to-exceed interest rate is 6.5 percent and the term of the bonds not exceeding March 1, 2055.
“That is a 30-year maturity,” Algood said. “We want to keep that lower between 20 and 24 if we can.”
The resolution, which approved the hiring of Centennial Bank to act as trustee for bonds and the hiring of Colliers to serve as the appraiser, passed unanimously.
Before both meetings started, there was a period for public comment. However, no one from the public spoke.