Mayor seeks to move ahead on 1 bond issue
NLR building-cost overrun priority for now
North Little Rock Mayor Joe Smith will seek approval from the City Council on Monday to move forward on a proposed $10 million bond issue to cover an expected overrun in the construction cost for a new police and courts building.
A separate resolution for a $4 million bond issue to make upgrades to North Little Rock Municipal Airport, 8200 Remount Road, is also on the agenda. Smith, though, said Friday that he will postpone the airport legislation until he can provide more information to council members about its construction plans.
Neither resolution is to approve the issuance of revenue bonds, but only to authorize the city to hire Stephens Inc. as bond underwriter and Friday, Eldredge & Clark as bond counsel to proceed with potential financing options. The city has used both companies before for bond issues.
Smith announced his plans to issue bonds in November, but needs council approval to begin the process.
“This really just gets us going,” city Finance Director Karen Scott said of the pending resolutions. “It gives us the ability to actually hire people and start working on it. Then there will be a series of legislation to authorize the actual transaction. It will probably be a minimum of 90 days before any bonds are issued.”
The bonds would be backed by revenue from the
city’s franchise fees charged to utilities and cable companies. The 2019 budget projects $3.37 million in franchise-fee revenue. The length of the bond issues hasn’t been determined, Scott said.
Smith said last week that he decided to split the bond package into separate proposals after some council members expressed concerns about the scope of the airport project. Smith originally estimated the airport portion to be $5 million, but has lowered his proposal to $4 million, eliminating the inclusion of a restaurant on airport grounds.
Council members already approved on Dec. 10 the hiring of an architectural firm to design the new police and courts building that isn’t to exceed $30 million in total. That approval came only after some members questioned the $10 million overrun and wanted assurance that the project wouldn’t exceed that figure. The new building had been projected to cost $20 million when voters passed a 1 percent city sales-tax package in August 2017 that included relocating the police and courts building.
The location has since been decided as the 26002700 blocks of Poplar Street, where the Arkansas National Guard’s Fisher Armory and the North Little Rock School District administration building are now. All parties agreed last year on a land exchange, plus a $500,000 payment by the city to acquire the properties.
The first $20 million of the building’s cost is to be funded from the five-year, one-half percent portion of the sales tax voters approved. The one-half percent is expected to raise $40 million over its five-year life. The remaining $20 million in the tax revenue is to be evenly divided between street and drainage improvements and either new or renovated fire stations.
The other one-half percent of the tax package is permanent, providing a steady revenue source to the city’s general fund.
The airport’s lack of a modern aviation center is a drawback for businesses in North Little Rock flying in clients considering doing business in the city, Smith has said. The airport bond issue would aim to provide such an upgrade.
“For the most part, I’m for it,” said Council Member Charlie Hight, who represents Ward 4, where the airport sits on the northern edge of the city. “If we’re going to attract some corporate jets to come to our airport, we need facilities out there that are attractive to them. In order to do that, it’s going to take a little money.”
Smith said Friday that he decided to postpone any consideration of the airport bonds Monday because a few council members want more information about the proposed buildings and their location on the airport property.
“I’m OK with that,” Smith said. “I’m going to work on that and try to put a package together to give a better idea on where that money is going to go. I will call the $10 million [bond legislation] on the Police Department building and hold the airport until our last meeting in January, or maybe February, until I get a package together for them.”
Adding a restaurant at the airport was one of the amenities emphasized during early promotion of the project. But, at an additional cost of $1 million, including a restaurant could have grounded the entire project, Smith said.
“The concern I was getting from the City Council was about the restaurant building that was part of our original scope of work out there,” Smith said. “So I realized that probably wasn’t going to get the votes if I included the restaurant. So we took those numbers out.”
An airport restaurant would give corporate pilots a place to lounge and eat while waiting for their clients. It’s the pilots who make the arrangements for where a plane will land, and a restaurant would help to draw more business, supporters of the plan have said.
Hight, though, said that “a restaurant out there would have a hard time making it,” because of the airport’s location in a largely isolated part of the city.
“I don’t think there’s enough traffic out there for a restaurant,” Hight said. “Why spend a million dollars on a facility with a restaurant with the chances of it surviving being slim and none? I had some concerns that I voiced to Clay [Rogers, the airport’s general manager] and to the mayor.”