Canton's leap of faithDespite many variables, the town took the final step in ensuring its new pool is finished in 2017
CANTON — Canton has taken the last and most crucial step in making its highly anticipated pool a reality, but the price tag sparked a lengthy discussion.
The board advertised for bids, asking for offers on a 20-year financing package. Instead, the lone bid to be considered was for a 15-year term, which considerably increased the annual payments.
No members of the public were present for the hearing.
Town Manager Seth Hendler-Voss presented the two financing offers received by the town. The offer from HomeTrust Bank was immediately disqualified because the state mandates only the item being financed can be used as collateral. HomeTrust was requiring the town to collateralize something outside the flood zone, which excludes the pool.
This left a loan offer from BB&T Governmental Finance in Charlotte, which offered up to $1 million at a fixed rate of 2.89 percent over a 15-year term, a far cry from the 40-year term promised by the USDA loan, which fell through earlier this year.
Before the board got into the meat of the discussion, Hendler-Voss broke down the numbers, noting that — assuming a couple variables fall into place — Canton will end up taking out a $775,000 loan, which he said is reasonable considering the project’s hefty $2,034,000 price tag.
Once all the numbers — and variables — were on the table, the discussion began.
The first big item was a potential $50,000 grant from Haywood County, which has not even been requested yet. The board quickly agreed that it wants to make a focused effort to pursue this funding source.
“That was the easy part,” Alderman Zeb Smathers joked following the motion.
Hendler-Voss said he believes the county should chip in, especially considering the majority of pool users are not Canton residents.
“Seventy percent of pool users don’t pay town taxes, so it seems that we should be granted an audience to talk,” he said.
There were many recommendations for other ways to scrape together funds, and the point was brought up that as the loan ages, the town will retire a number of heavy debts, including the recently approved police vehicles, a wood chipper and a street sweeper.
Hendler-Voss said some of the town’s larger one-time expenses incurred this year, including a new website which ended up being $30,000 and a new $5,000 phone system, won’t be incurred in 2017.
Hendler-Voss also said that a rise in ticket prices would help the town make ends meet.
Last year, Canton netted about $33,000 from selling 9,571 regular tickets (in addition to some seasonal passes) with the tickets being sold for $3 for all over age 2. Hendler-Voss said, assuming there is a price increase to $5 per ticket, that’s would generate an additional $26,000.
“Adjusting the ticket prices is paramount to this project,” he said. “And we’d still be the best deal in town.”
At one point, mayor Mike Ray did bring up the idea of suspending the project for a year to shore up more of the variables.
“I just wanted to make sure everything is looked at and brought up,” he later said. “I want to make sure we stay fiscally responsible in the years ahead. It’s my job as mayor to make sure everything is looked at.”
But the board quickly agreed the project needs to happen. Alderwoman Carole Edwards, who is usually more cautious, said she wants to go forward with the project, but that the board may have to find things to cut at some point to afford the first loan payment.
“I don’t want to take out this loan and not be able to make the payments,” she said
Hendler-Voss argued that the larger payments are a challenge but still “not an exorbitant amount of money when you look at the entire budget.”
Smathers expressed some skepticism.
“I have some concerns,” he said. “There’s a lot of ifs and ands and maybes here,” later adding it would be better for the board to take a leap of faith than to hold its breath and allow time for loan rates to go up.
As the timeline for the pool extends, residents are going to start losing faith, he said.
Alderwoman Gail Mull agreed.
“This is something we’ve worked toward and campaigned on,” she said.
Alderman Ralph Hamlet had perhaps the boldest expression of optimism.
“We knew the risks here,” he said. “I think it makes a statement about who we are and how we envision the future here.”
After over an hour, once all the arguments were heard and Hendler-Voss made his case, it was time to close the public hearing and vote.
“There are a lot of variables here and a lot of what ifs … but at the end of the day, the decision to move forward is yours,” Hendler-Voss told the board.
Then, following a verbatim reading of the contract by Mayor Ray, it was the moment of truth, and the board voted unanimously to take out the loan.
The next order of business was deciding how to proceed, including how Canton could obtain the previously discussed $50,000 from the county. It was decided that the members would all talk with their peers in the county, but the formal request would ultimately be signed and sent by Ray.
Keith Corbeil, the town's recreation program coordinator and pool operator questioned having an unheated pool, which is currently the case unless costs fall below expectations. After a lengthy discussion, Corbeil, along with the board made, it known that a water heater — which runs about $64,000 — should be made a priority.
“I was adamant about getting the pool heater,” Ray said. “If we’re doing things at the pool in the mornings and it’s cold, that will be important.”
Canton has done all it can to make the project happen, but the final decision rests in the hands of the N.C. Local Government Commission (LGC), which must grant approval to any municipality looking to finance any project. Decisions on the loan were made based on a list of LGC guidelines, such as not taking loans with greater than a 20-year term and ensuring the loan has a fixed interest rate. Hendler-Voss said he is optimistic the project will be approved.
“We feel good about that,” he said. “We had a teleconference with LGC officials to review the project, and we were given positive feedback. There’s no guarantees, but we had an encouraging conversation.”
“There should be no more surprises at this stage,” Smathers said.
The good news is the payments will drop considerably over the life of the 15-year term. While the first payment is $74,064.17 — almost $30,000 more than the anticipated $45,000 payment with the USDA loan — the final payment will be $53,159.83.
Also, because the loan has a fixed rate over a shorter term, the town will see considerable savings compared to the 40-year USDA loan. Consultant Steven Miller noted in an email that if the existing loan extended to 20 years, the total interest paid by Canton would be $55,994 more. Furthermore, Miller said that if the loan term were 20 years, the interest rate would be higher to compensate with the higher risk. If the town had taken the 40-year USDA loan at a rate of 3.25 percent, the total interest paid would be nearly $1 million.
Hendler-Voss said the paperwork will be submitted to the LGC on Jan. 10, and he expects the commission to give an answer shortly after its meeting in early February. If the LGC approves the financing, the town will immediately begin demolishing the old pool and construction on the new one will begin March 1, with the pool opening no later than Aug. 1.