Enterprise City Council discusses financing options

The way to finance some of the capital projects that the Enterprise City Council is considering was discussed at the Enterprise City Council work session April 7.

Louis Cardinal, Executive Vice President of Montgomery-based Thornton Farish, a private investment banking firm, gave an overview of the current bond market to the council.

The council has discussed a street repaving project to be done in several phases that is expected to cost around $7.8 million and a proposed soccer complex.

“I think before we really move forward, given the current events, it is important that the city step back and try to reflect on whether this is the appropriate time to move forward with those capital improvements,” Cardinal said. “That’s Number 1—and only the council can make that decision moving forward.”

Cardinal recommended that the council “get in a position to move into the bond market to permanently finance those improvements that you have deemed important to the city.

“At that time then we can determine the size of the money issue,” he said. “The general consensus in our industry is that folks that have projects that they want to do are getting ready, getting bond issues rated and they are trying to see if there is a window of opportunity over the next several months when things, hopefully, stabilize.

“We’re advising our clients to go forward and permanently finance now if they have projects that they have ‘scrubbed down’ and that they are ready to go with,” Cardinal said, comparing the current economic situation to 2008 and 2009. “Rates spiked initially for several months and then stabilized back down.

“Our recommendation is to get ready to get in the bond market so we can be positioned to move,” Cardinal said. “My recommendation is to go forward with planning.

“You have to decide what you need to finance permanently that you can’t finance through cash flow,” he told the council. “The first step is to look at your capital budget and see how much you are going to have to borrow.

“During these difficult times, the council has to decide what that new money piece is going to consist of,” Cardinal said, adding that the next step is to contact a rating agency.

“A rating is generally good for six months,” he said. “The sooner you start that process the better. It’s best to be ready, even though you have to go through the rating process at a difficult time.

“The only two people who know where the interest rates are going to go are those that don’t know and those that don’t know that they don’t know,” Cardinal told the council. “The point is that it’s fair to say that the economy will heal with the stimulus. In this next stimulus bill, they may have some relief for municipalities.”

The next meeting of the Enterprise City Council is May 5 at the Enterprise City Hall. A work session is set to begin at 5 p.m. followed by a voting meeting at 6 p.m. The meeting is open to the public and is also live streamed on the city’s You Tube channel.