LEDA members discussed the resolution earlier this month, but couldn't take any action because decisions to incur debt must win approval from three-fourths of the nine-member board (seven members) and only six members attended the meeting. But, members are working to schedule another meeting before the issue is taken to the City Council, action expected at the council's Aug. 13 session.
At issue is a decision to replace a $31.6 million note issued in 2013 for the Tax Increment Financing (TIF) district that developers, LEDA and the City of Lawton have used to bring new development to Northwest 2nd Street, between West Gore Boulevard and Northwest Ferris.
Problems have arisen because funding initially set aside for a reserve fund were applied to other expenses under the note. LEDA Chairman Fred Fitch said the action benefitted LEDA by lessening its overall debt, but also left the entity without a reserve fund and short of money needed to fully cover the project's obligations.
The new $28.5 million tax apportionment note would include $26.305 million to refinance the outstanding debt of the original note, plus funding for other obligations, including a new reserve fund of $1.3 million.
Nathan Ellis, bond counsel for the Public Finance Law Group, said the terms of the new agreement would be more beneficial for LEDA because of the change in the interest rate (which would specify the Prime Rate). Ellis said other terms, including the sales tax apportionment, would remain unchanged.
Ellis and Fitch said the changes, including a better interest rate, will make the note series "more marketable" for the financial entities that would buy it.
The debt from that note is repaid via new sales and ad valorem taxes generated by entities moving into the Second Street development and generating revenue. City officials have said that contrasts sharply with deteriorating property and empty lots that were in that area between Northwest 2nd and Railroad Street - and not generating much tax revenue - before the retail development was created by Collett Properties.
But, LEDA members also remain mindful that additional development must take place, including what is designated as the retail project's Phase II.
"We need Phase II to kick in. There is too much empty ground out there," said Community Services Director Richard Rogalski, the City of Lawton staff member who works with LEDA.
Fitch and others pointed to some development that is beginning, such as the Bricktown Brewery expected to break ground at the northeast corner of Northwest 2nd Street and West Gore Boulevard in coming weeks. That restaurant, a popular venue in Oklahoma
City's Bricktown District and in four other states, is expected to draw additional development to downtown, developer Mike Brown has said.
The resolution that LEDA is expected to approve in coming weeks would authorize the issuance of the Series 2019 note in a maximum principal amount not to exceed $28.5 million, for the purpose of refinancing the outstanding amount of the 2013 note; funding a bond reserve account; and paying project costs and other related costs.
Competitive bidding for the sale would be waived, with authorization given for the sale to BancFirst as lead purchaser, under the terms of the resolution. The initial rate on the 2019 note will be calculated based on the Prime Rate with a minimum rate of 4.50 percent (it is expected to be 5.5 percent through Sept. 1). The debt may be issued in bond or bonds, note or notes.
The resolution specifies that LEDA is authorized to issue tax apportionment bonds to provide assistance to the city in financing redevelopment activities in the downtown area defined as increment districts 1 and
2. Activities may include acquisition of land, redevelopment of property and related revitalization activities, including new infrastructure for utilities and drainage, utility relocations, city office buildings, and payment of the principal of and interest on notes issued for such purposes, reimbursement to the city, LEDA or Lawton Urban Renewal Authority for any advances for such purposes, or expenses related to issuing the note.