As promised, work crews were on site Monday morning to continue renovations to the old Cowboy Maloney building on 22nd Avenue. That’s where work is under way to turn the building into a new police department.  The Meridian City Council approved a lease with Meridian Law Enforcement Center LLC on Saturday, paving the way for work to get going again.

    Work had stalled on the multi-million dollar project as David Watkins of Watkins Development awaited valuable tax credits from state and federal sources. The new contractor for the project, Tim Allred of Heritage Building Corporation, came on board about two months ago and had told the council Friday if they approved the revised lease Friday or Saturday, he could be on the job as early as Monday.

    The previous contractor had made some progress on the 44,000 square foot building, Allred said Monday as he walked through the interior of the building.

    “Up to this point they’ve done all the demolition that needed to be done inside the building. They’ve come in and put in all the new plumbing for the restrooms and handicapped facilities, and the break rooms,” Allred said. “All the rough-in plumbing, the flooring has been cut, put in, and put back. All the interior stud walls are up. The electrical rough-in has started and is about 30 to 40 percent complete. For the secured area, the concrete block structure is already in place.”

    Much remains to be done in the secure area that will house the jail facility, Allred said. He is waiting on final plans from the architect and engineers for the secure area.

    “The additions to the outside of the building, the sally port and the vehicle storage already have been framed in but they don’t have roofs on them so we’ll soon start putting the roofs on those,” Allred said.

    They will begin prepping the outside of the building for final front elevations, paint and new front elevations in the very near future, he said.

    Allred has pledged about six to seven months for completion of the project, but the final start date doesn’t begin until they have final plans from the architect and engineers.

    “Then it will go through Community Development for Approval. They’ll have to go through those plans and review them, then sign off on them,” Allred said. “Once that’s done, that’s our start date. What we’re doing now is finalizing demolition and doing some things in prep work. We’re not actually started until those plans get approved, which will be about two to three weeks.”

    Then work will be fast and furious, he said.

    “We won’t go so fast we don’t do a really good job, but we will be moving as fast as we can because the conditions where the policemen are working are really unbearable,” Allred said. “They’re very limited in their air conditioning capacity down there right now and in this heat, that’s a vital thing. And in the wintertime, it’s going to be really cold, and we hope to have them in this facility by that time period so they can have a nice, heated facility too.”

    The city will pay rent over a period of 20 years for a minimum of $8.2 million, including $2.1 million the city will pay up front from funds derived from police department seized property.

    The annual rent will be $305,000,allowing for possible increases based on the consumer price index every five years.

Meridian Mayor Cheri Barry released a statement following the lease approval by the City Council on Saturday. The statement is as follows:

Mayor Barry Statement Regarding the Meridian Law Enforcement Center

Today the City Council approved an order to move forward with the Meridian Law Enforcement Center project.

While we have a new lease, we maintained four very important aspects of the project.

This is still a lease-purchase project.

The City still does not have the risk of cost overruns.

City municipal bonding capacity is not affected.

The City does not pay rent until we move in to the building.

Watkins Development has partnered with local contractor Tim Allred, of Heritage Building Corporation, to begin construction immediately and complete the project by the beginning of the year.

Parts of the financing for this lease-purchase project are bonds that are passing through the Urban Renewal Authority.

I want to be clear that the bonds used through the URA are not municipal bonds and do not affect the City’s bonding capacity.

The City of Meridian is spending 8.2 million dollars on this project.

Bonding capacity is a limited resource. With any limited resource, we have to make the best possible decisions on how and when to use it. 

Public servants, more so than anyone else, must be especially dutiful with these decisions. 

By using a lease-purchase agreement for the police station, we use no bonding capacity for the Meridian Law Enforcement Center. 

The financing was delayed due to an unforeseen hold-up with new market tax credits, which are an important aspect of the project’s funding. 

Because of the financial structure of the project, the delay costs the citizens nothing. Until we move in, all of the costs are the responsibility of the developer. 

There are many moving parts in this project. Any one of them can throw off the completion date. And one did. 

Our deepest regret is that this delay prevents our police officers from getting a fully functional work environment. 

That day is coming. Perhaps not as soon as we would like, but it is coming—without raising taxes.

For more details on this project, and a breakdown of the financials, please see our official statement on  HYPERLINK “http://www.meridianms.org” www.meridianms.org.

 

Mayor Barry also released a report from Bill Crawford, chairman of the Meridian Urban Renewal Authority. The report is as follows:

Financing for Meridian Law Enforcement Center Project

Mayor Barry, here is my analysis of the financing of the Meridian Law Enforcement Center Project.

Citizens National Bank will contribute $1,240,200 to the project in return for state tax credits.

The City will inject $2,100,000 million from drug seizure funds into the project. 

The Urban Renewal Authority will issue $2,355,000 in bonds for the project.

The Urban Renewal Authority will issue $2,100,000 in short-term bonds for the project.

Out of these funds, the Urban Renewal Authority will make “leverage loans” to the “investment fund” controlled by U.S. Bank.  Leverage loan A will be for $2,355,000. Leverage loan B will be for $3,334,950, both interest only for 7 years. 

Citizens National Bank will hold the drug seizure funds in escrow. Upon occupancy of the center, the drug funds will be used to pay off the short-term bonds. The drug seizure fund/short-term bond transaction helps leverage the deal to attract sufficient tax credits to make the deal work. 

U.S. Bank will provide $2,325,100 million directly to the investment fund for investment in the project.

The investment fund will inject $7,955,283 into the project in the form of two loans to the developer. Loan A will be for $2,355,000. Loan B will be for $5,600,283.

The developer will sign a lease with the City. Lease payments will be used to pay loan interest and principal to the investment fund. The investment fund will use these funds to pay loan interest and principal to the Urban Renewal Authority. The Urban Renewal Authority will use these funds to retire bonds.

The $1,240,000 provided by Citizens National Bank, the City’s $2,100,000 in drug seizure funds, and the $2,325,100 provided by U.S. Bank make up the $5,600,283 Loan B mentioned above. However, they are really capital injections, not loans. The complexity is that they must be treated as loans. So, the City will pay supplemental lease payments to the developer after the 7-year compliance period for the tax credit has ended. 

The developer will use these funds to pay off the $5,600,383 loan to the investment fund. How will this money get back to the City? Control of the investment fund will be “put” to the Urban Renewal Authority for $1,000 after the 7-year period. So, when the developer pays the investment fund controlled by the Urban Renewal Authority, the City may then recapture its payments from the Urban Renewal Authority. 

Cashflows, fees, and authorities for all the above are not simple. However, they have been reviewed by lawyers representing the City, Citizens National Bank, and U.S. Bank and found to be appropriate. After all legal fees, bond fees, and other start-up fees are paid, the City will still net substantial benefits from the $3,565,300 provided by Citizens National Bank and U.S. Bank for using tax credits to help finance this project.

The final steps for this project as I see them are to make sure the City and Urban Renewal Authority risks and security interests are protected in this deal and a CPA representing the City signs off on the cashflows.