Milford City Council approved interim financing for the new police facility in order to minimize costs. According to Lou Vitola, City Finance Director, the financing plan for the facility included a period of debt-reimbursable cash financing followed by a period of interim, short-term financing known as Bond Anticipation Notes (BAN) before permanent financing was secured.
“The question is when to step into each level of funding,” Vitola said. “From August 2021 until around April 2022, the majority of our costs will be for construction management and architectural services. Starting in April 2022, costs will begin including construction services which will increase our costs significantly through April 2023. It will level off again somewhat as costs will then begin including furniture, technology outfitting and other fees through September 2023. The question of when to step into these different levels of financing is really dictated by the inflection points of the expenditure curve, so this resolution is just for interim financing.”
Vitola also explained that by using the interim financing, the city could take advantage of favorable rates and terms while also allowing them to stagger the costs over two calendar years. It would also allow them to get the credit in place to meet project liabilities as they came due should that be sooner than the architects currently expect.
“This is based on the city’s direction to get to $13 million flat in construction costs,” Vitola said. “After construction manager fees, architect fees and other costs, this will result in a $17 million project with $16 million to $16.5 million needing to be financed. This agrees with what council and staff have represented in materials published at the time of the referendum.”
Councilman Jason James stated that he felt this was the proper way to go, commending Vitola for his work on the financing of the building.
“I think we are very blessed to have someone who can do this type of work and go into the detail,” Councilman James said. “This is not rocket science, but it does take someone to be diligent in the financing and know when to pull the trigger on certain things. We are very fortunate to have a professional who is doing this the right way.”
Mayor Archie Campbell stated that keeping the cost of the building around $17 million made him a “happy camper.”
The resolution passed unanimously with no public comment.
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