Gary's Public Safety Facility at 5th and Polk
Gary seals deal on Public Safety Facility sale leaseback
Contributed By:The 411 News
Mayor says Gary will be able to pay its bills and invest in infrastructure and equipment
Gary will get its long sought sale leaseback of the city’s Public Safety Facility.
Mayor Karen Freeman-Wilson announced Wednesday the closing of an agreement with investors to provide the city with a $40 million loan. In exchange, the building located at 555 Polk Street, will be leased back to the city to continue its use as the police department, and home to the city court and city clerk.
“We are excited to announce the sale of bonds that represent a key part of the city of Gary’s Financial Recovery Plan,” Mayor Freeman-Wilson said in a statement. “When we joined with the Gary Common Council, city staff, Comer Capital Group and Whittaker & Associates to create a Financial Recovery Team, we knew that we would have to be innovative and steadfast in our decision-making. The sale leaseback fits squarely in our plan.
Gary’s city council first approved the sale leaseback in October 2018. The city held back on closing the deal, the mayor said, waiting for more favorable interest rates.
After the mayor revived the sale leaseback in early summer, it hit another roadblock. The mayor had lost her re-election bid to Jerome Prince in the May Democratic Primary and he opposed it. Prince said he could get a better deal.
In October, Prince announced investors had agreed to his terms. Prince said he had secured a lower interest rate that would save the city $4,486,000 million from the agreement negotiated by the mayor.
The tax-exempt transaction utilizes fixed-rate bonds to sell and lease back the city’s public safety building to the locally-based Gary Building Corporation, a non-profit organization, in order to shore up funds for the city.
The mayor added, “While adherence to the plan is important, this financing also allows us to factor in investment in infrastructure and equipment that will allow our team to serve our citizens with pride. For the first time in two decades, the city of Gary will start the year with money in the bank. The Prince team will begin governing on a solid financial foundation.”
The sale leaseback was packaged by Wells Fargo, Preston Hollow Capital, and Comer Capital Group.
Brandon Comer, Managing Partner of Comer Capital Group served as municipal advisor on the sale leaseback transaction. Comer said, “To assist my hometown in structuring a transaction that addresses many of its financial concerns and provides necessary cash flow to allow for the implementation of a sustainable financial recovery plan has been quintessentially rewarding. There was a lot of initial pushback from the marketplace, but we were ultimately able to demonstrate to investors what we already knew, this is a solid transaction and Gary is on the road to recovery.”
Kevin Hoecker, Head of Midwest Public Finance at Wells Fargo and lead banker on the financing said. “In addition to negotiating favorable terms for the city, the strength of the overall market helped the city achieve an attractive financing cost under its budget.”
Charlie Visconsi, Co-Head of Originations for Preston Hollow Capital said. “It will be transformative to allow the city to retire a variety of obligations including Tax Anticipation Notes, a Revenue Anticipation Note as well as a variety of payables and interfund loans owed by the city. The 20-year bond financing provided a lower interest rate of over 100 basis points relative to its interim borrowing allowing the city to reset its borrowing costs.”
Story Posted:11/21/2019
|
