Sugarland TIF put on hold

A spiraling bond market has forced Sugar Creek to postpone a tax increment financing plan for the Sugarland Center – a 225,000-square-foot retail redevelopment along the northwest corner of U.S. 24 and Sterling Avenue.

“We need help,” Martinovich said about the need to look outside city staff for expertise. “There are some tasks that need to be accomplished immediately.”

The city had planned to issue TIF bonds as soon as possible in order to keep moving forward on the project, but has decided further study of the market would be in its best interests.

For the past month, Springsted Inc., a financial advisory service in Kansas City, has helped the city develop a plan to address interim financing and the distribution of the TIF bonds.

At Monday night’s Board of Aldermen meeting, an ordinance was approved that will continue the hourly rate of $215 (not to exceed $5,000) to Tom Kaleko, Springsted’s senior vice president and client representative, until the finance plan is complete. For the next phase – involving the actual issuance of the TIF bonds – there will be a fixed fee of $9,500 for Springsted’s services, which will include developing a timetable, monitoring market conditions and assisting with the closing of the bond process.

“I know (City Attorney Bob Buckley), myself and our special counsel feel this is a very important service to the city,” Martinovich said.

During the planning phase, Springsted has been working closely with Jeff Peterson, the developer of the project.

According to Martinovich, Springsted is specialized in making the best all-around financial decision for the bond whereas other financial advisory companies might look at the most marketable financial structure regardless if it’s the best option for the city.

The company will also look at the actual amount generated from the project vs. what was projected.

“That’s so the city has the assurance that it will have the necessary income coming in from the other side of the project in order to be able to service the debt on these bonds,” Martinovich said.