MONROE — The City Council approved a financial plan to use millions of dollars of anticipated funds last week.
The sale of the Galaxy Theater land is expected to bring in $2 million, the sale of North Kelsey land to Nexcore is expected to bring in $2.5 million and the agreement with the Sabey Corp. (handling the Walmart deal) is anticipated to bring in $7.5 million.
A purchase and sale agreement was signed for the NexCore Providence medical center in February and the city gave Sabey a deadline extension to close their purchase and sale agreement in June. The city expects to close the Galaxy land sale Aug. 5.
The city would use the money to fill its rainy day fund, to put toward projects and other uses.
City finance director Dianne Nelson said that creating a financial plan for money yet to show is “unusual.”
“We don’t normally do this, but we know, we’re very confident that the sales will go through,” Nelson said.
If the sales go through, Nelson said the city “is going to all of a sudden come into a large chunk of money, so rather than have it whittled away, they wanted to have a plan in place to show good stewardship of public funds.”
When Sabey agreed in June to extend the existing purchase and sale agreement deadline with the city, they had “shown good faith” they would go through with the deal, Nelson said.
If the sales don’t close, the city will be left with a large outstanding debt on property in North Kelsey, which is due at the end of 2015.
In that case, Nelson said the city would either sell the land to someone else or roll over the bonds from short-term to long-term. Long-term bonds carry a higher interest rate, Nelson said.
A lawsuit presented by citizen group Friends of North Kelsey is currently holding up the Walmart deal. Friends opposed the corporation’s plans in court to build a 155,000 square-foot supercenter in North Kelsey.
The group has filed their brief and is waiting for the city’s rebuttal, due this week. The ruling judge will then decide whether or not to grant an appeals hearing.
Attorney Claudia Newman, representing the group, has said that the city failed to apply the North Kelsey guidelines to the Walmart project, which was voter-approved and mandates that the area be pedestrian-friendly, park-like, and centered around a village green with other pedestrian amenities.
Nelson does not see the lawsuit ultimately keeping the sale from going through.
Money from the NexCore Providence and Galaxy Theater sales will be distributed as follows, as per the council’s intent:
• $2.5 million to fund reserves
• $750,000 to an operating reserve for economic hard times to be used at $250,000 per year
• $350,000 to the North Kelsey Development Fund for costs of developing/selling land
• $200,000 to the city’s sick leave reserve fund
• $150,000 to a traffic study for the comprehensive plan
• Approximately $100,000 for interest on the North Kelsey debt.
There will be a remainder of approximately $550,000 to the council contingency fund.
Nelson explained that this is a newly created fund which allows money to be put in but only taken out with action by the council.
“It’s used at the council’s discretion,” Nelson said.
The funds received from the city’s impending Sabey deal in 2013 will be used as follows, assuming the sale goes through: $6.5 million to pay principal and interest on the North Kelsey debt and $1 million to the council contingency fund.