Convention center plans halted
Published 12:04 am Thursday, January 15, 2015
The Natchez Board of Aldermen voted Wednesday to hold off on restructuring its bond payments for the Natchez Convention Center — and a possible tax increase to fund an expansion — until a later date.
Demery Grubbs, the city’s financial adviser, met with the Natchez Board of Aldermen in City Hall Wednesday. Board members requested in December that Grubbs attend a meeting in January to discuss the city’s finances.
“We wanted to have (Grubbs) come in and acquaint the board with the old issues and the debt structure that we currently have and try to explain what the ins and outs are to add new debt,” said Mayor Butch Brown.
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Brown said the city has to restructure its debt on the Natchez Convention Center in order to avoid increasing annual payments.
The city can do that in two ways — by restructuring the debt alone or adding an expansion plan for the convention center.
The expansion plan, however, would require an increase in taxes.
“There are two ways you can do this — one is to go through (the general obligation bond) or you can ask for another additional tax,” Grubbs said. “You have to have the sales tax in place, which needs local and private legislation.”
Under the existing structure bond, the convention center debt should be paid in full by 2024.
The $12 million bond was issued in 1999 to build and furnish the convention center while also renovating the Natchez Community Center and Natchez City Auditorium.
The city refinanced a fraction of the bond through an interest rate swap transaction, which was executed in 2006 with Malachi Financial Products in an effort to save a projected $1.5 million over the following 18 years.
The payment for the refinanced bonds will increase to nearly $1 million this year and average approximately that until the bond retires in 2024.
One of the proposed plans Brown presented to the board included restructuring the current bond on the convention center to add 10 years and nearly $4.5 million to pay for an expansion of the convention center and fees associated with the project.
To fund the expansion, the city is proposing an increase to the current 3-percent lodging tax, which will be increased by 1 percent to a total of 4 percent, and the 1.5-percent restaurant tax, which will be increased by 0.5 percent to a total of 2 percent.
“This bond that we are talking about will only increase tax by two cents on the price of a six dollar drive through meal,” Brown said.
A 1-percent increase to room tax would bring $166,000, said convention center general manager Walter Tipton during the meeting Wednesday. A 0.5-percent increase to the restaurant tax would bring $243,000 — for a total of approximately $400,000 in additional annual revenue to support the expansion of the convention center.
The increased taxes would require legislative action, but first needs to be approved by the board.
“You have to weigh it out and see,” said Alderman Dan Dillard. “We have to take the numbers and digest for a little while.”
Brown said the board now has a clear understating of restructuring the bonds and should be ready to make the decision at a later meeting.