Arkadelphia, Ark. –
Though all of Arkadelphia’s city directors support the purchase of the Royal Theatre, two directors oppose how the administration is proposing the city pay for it.
A crowd of about 30 people, most of them Southern Bancorp employees, attended a special meeting Thursday morning in the Town Hall Boardroom, where a full quorum of board directors gave their input on a bond issuance.
In its last regular meeting, the board passed an “intent resolution,” 4-1, for the intent of issuing $2.6 million in new bonds for construction and refinancing the city’s 2003 bond.
Carey Smith of Stephens, Inc., told the board in its last meeting that the interest rate market is currently “very favorable” and, based on a 25-year term and “conservative estimates” based on current rates, the payments of the new bonds “should be in the range of $240,000 to $260,000 per year.”
The final step in the process will be for the board to approve a bond ordinance after the bonds have been marketed to investors. In order to lock in the final interest rates with investors, it will be necessary for the board to adopt the ordinance within a few days after the bond sale. Also, the board will need to conduct all three required readings of the ordinance at the same meeting in order for it to be adopted that evening.
Director-at-Large James Calhoun voted against the resolution, citing that putting the city in long-term debt could be a bad decision with an uncertain financial future. Anthony Owen said he was “hesitant” about voting in favor of the resolution, echoing Calhoun’s concerns.
The issue now is that City Manager Jimmy Bolt needs the board’s support from at least five directors before a firm can lock in bonds that would finance the Royal and construction of a new fire station, with the remainder of the funds to be used in the Youth Sports Complex. The budgets for the theatre and the fire station are, respectively, $1.25 million and $1.05 million.
Mayor Chuck Hollingshead called the meeting to order and explained to directors the reason for a special meeting. He said there was not full board support for the bond purchase after Smith gave his presentation, and Bolt later called Smith to put a hold on locking in the bond purchase. The reason for the special meeting, he said, was to see whether or not the board is committed in following through with the Royal and proceeding with funding the project.
Bolt said he did not know before the last meeting that there would be opposition to the resolution. He gave directors a list of events that led up to the bond issuance, beginning with the organization of the Clark County Strategic Plan, which spelled out a need for a theater, in 2007.
In July 2008, the board voted in favor of Bolt’s three “concepts”, one of which was purchasing the old Royal Theatre, renovating it and re-opening it. In February 2009, the board voted almost unanimously to purchase the building for $238,000. “We have a bill (for the building) coming in March,” he said. It was the reason for proposing the bond issuance, he added. He said the bond purchase is “do-able within reason” and was part of the 2010 budget. He added recent trend has shown that franchise fees are on the rise and, should that trend continue, the bond could be paid using that money.
Hollingshead asked each director to give their ideas on the issue.
Brenda Hagerich said one of her main concerns is the vibrance of downtown. Noting Arkadelphia is a two-university city in which college students can walk from school to downtown, “I am very much in favor of a theater,” she said. When Thrio’s closed, she added, students went to her with concerns of what they would do for entertainment, she said. “We need something, a place for them to go … It may cost in the long run.”
Don Hager said there has been “poll after poll after poll” in which locals have shown a desire for a theater, and that the desire for a theater is commonly on top of the list. He said the Royal would be an “enhancement” to downtown and the city, and would give people a reason to stay in Arkadelphia for entertainment. He said the project is a “proactive step” and a “risk,” but he would be in favor of promoting Arkadelphia.
DeDe Baldwin offered a metaphor, paralleling her new driveway to the Royal. She said her family moved to Arkadelphia 10 years ago and had a gravel driveway. When it rained, the gravel would wash away, making it difficult to drive on. Also, she said, neighbors would not visit the Baldwins in fear that the rough gravel driveway might damage their vehicles. A couple of months ago, however, they purchased and had built a concrete driveway, and it added value to her home and property. “I’m sorry we waited so long,” she said of the concrete driveway. She said the theater, though a risk, would be an “investment.” She said she called some of her constituents, and all but one said she should vote in favor of the bond issuance.
Baldwin also referred to Wednesday’s edition of the Siftings Herald, which listed the main events of the past 10 years. Several businesses closed their doors in the span, including Piggly Wiggly, Harvest Foods, Aalf’s, Rudolph’s Furniture, Thrio’s and JCPenney.
She said the board voted to purchase the theater, “now we’ve got to do it. This is an investment in our future. If we don’t, we won’t have much of a future.”
Owen said improvements are a “great need” for the community, “but I think our wants outweigh our ability to pay for it.” Though the rates for the bond issuance are “decent,” he said the financial future of the city cannot be predicted, and the total cost of the bond would be “roughly” $2 million.
He suggested an election be held where Arkadelphia citizens decide on a 1/2 cent sales tax to fund the projects. Arguing Bolt’s point about growing trend in franchise fees, Owen said that, “When businesses leave, people leave.” That, he said, would have a negative effect on the franchise fees. “I love these projects, but I cannot support the way it’s financed.” He said a 1/2 cent Advertising and Promotion tax would offset the cost of the project. “I can’t support (this project) with the current structure. I’m not going to a member of the board that leaves the city” in financial distress.
Calhoun said he is “in favor of the commitments” but “opposed to the method” of financing the project. “We need to be reminded that what we’re doing is refinancing our 2003 debt.” Providing figures, he said the proposed bond issuance would, in the end, cost the city $6 million (including the refinancing of the 2003 bond).
He also argued Bolt’s idea of franchise fees offsetting the cost, noting that the fees are not collected from satellite dish services or cell phone services. He added that many people are abandoning home phone lines to use only cell phones.
He said another concern he had was that there were “multiple citizens” who did not know about the special meeting. (The Siftings was notified of the meeting after its deadline Thursday, at 4 p.m.) “People are not opposed to these projects, but they’re opposed to the way we’re going about it,” he said.
Vice Mayor Ann Sanders said she is in favor of all things the board has partially committed to. “To get things, you’ve got to go into debt to get them,” she said. “This is a large debt we knew we’d get. We knew that. We did overpay for the building, I will admit that.” She said the vibrance of the city has gone down “so far that it’s going to be a struggle to get back up” and that city leaders in the past have allowed good things to “fall by the wayside.” She added that, during her 19 years as a director, the board has had some “foolish … and stupid ideas … But we pulled through. No city can survive without paying somebody.”
Hollingshead compared the commitment to buying a home. Before he bought his first home, he said, he put the figures down on paper regarding how much total he would pay over a period of time. “It scared me to death,” he said, but he finally talked himself into the long-term commitment.
He said the question of why the county and city are not growing arose years ago, and said the lack of a movie theater has widely been desired by local residents. “I like movies, but I’m not going to drive to Benton or Little Rock” to see one. He said the movie theater Arkadelphia had in the 1980s was so popular that, at times, movie-goers could not find a parking place. He added that the Plan wanted to change the county’s future for the good, and the county as a whole made a commitment with the passage of the 1/2 cent economic development sales tax.
“I think it’s time,” Hollingshead said of the move. “It’s come down to seven people, and five people have to do it.” Using former President Harry S. Truman’s quote, he added, “If you can’t take the heat, stay out of the kitchen.”
Calhoun asked if the decision to move forward and OK the commitment could wait until the board’s next regular meeting next Thursday. Bolt said the city is “already behind” on its side of the deal, adding that “time is of the essence” for the decision to be made.
Hager moved that the board commit to the bond issuance, followed by a second from Sanders. The motion carried 5-2, with Owen and Calhoun voting “no.” Calhoun said his reason for voting against it was that he would like to have waited until the next regular board meeting.
The passage of Hager’s motion was followed by applause from those in attendance.
The next move for the project: The board must pass the bond issuance ordinance with an emergency clause, which will require a “yes” vote from five directors.