Rivercane debt $16 million

Published 7:43 pm Tuesday, February 22, 2011

Opponents of the City of Atmore’s recent tax increases believe the debt incurred by Rivercane, the 643-acre commercial development project at Interstate 65, may have played a factor in the decision.

But Mayor Howard Shell is standing behind the city’s investment, and believes it is a wise one.

“Absolutely,” Shell said.

Sign up for our daily email newsletter

Get the latest news sent to your inbox

In the nearly five years since the Rivercane announcement was made, city officials have borrowed more than $16 million to pay for both property and infrastructure needed for the development. A total of five loans and three bond issues make up the debt, which cost the city nearly $25,000 per month, not including the yearly bond payments.

Shell said the state of the economy has made it difficult to meet cash obligations, but said Rivercane was not the motive for raising taxes.

“When you owe money and the revenue starts slowing down, certainly it gets harder to pay the bills,” he said.

With the sales tax increase, the City of Atmore will now earn 4 cents on the dollar, as opposed to 3, while the state will continue to earn 4 cents and the county 1 cent. The increase could mean up to $1.2 million annually in additional city funds, according to sales tax records, but it all hinges on the ever-changing state of the economy.

“So what we are seeing this year in revenue, we honestly don’t know how we are going to be affected,” Shell said about the increase last week. “I have talked to other mayors that are the same way; you can’t take a number and translate it into what you are going to do next year or the year after. You can hope that you hold on to it, but you don’t know.”

It could be easy to translate the $3,267,026 in sales tax revenue generated for the city last year into more than $1 million at the conclusion of fiscal year 2012 when the new sales tax revenues are felt for entire 12 months of a budget cycle, but Shell is not counting on that large of an increase. He believes it will help the city to the tune of $350,00 to $400,000 this fiscal year. As for the next year, it is a mystery.

When the Rivercane announcement was made in May 2006, Atmore Industrial Development Board members and city officials had high hopes that the prime real estate would take shape quickly. Unfortunately, the economy nationwide took a nosedive and has delayed the already slow progress to a snails pace.

“It’s a little slower than we thought it was going to be,” Shell said. “If we are not positive about it, it’s going to be even slower than it is now.”

A positive attitude is what Shell said all involved in growing the development are taking.

“We will continue to do everything we can do to develop Rivercane,” Shell said. “When we bought Rivercane, the economy was a lot different. When we bought Rivercane, the price you pay for gas was a lot cheaper. The economy was doing good everywhere; it’s not doing good now, and we’re like many other cities throughout the United States.”

Currently the city owes a total of $16,837,393.75 for the Rivercane project. United Bank financed one loan in the amount of $1,417,266.40, which cost the city $11,918 per month or $143,016 per year. First National Bank & Trust financed the remaining four loans to the tune of $3,695,845.01, which cost the city $12,700 per month or $151,600 per year. All five loans total $24,618 in added monthly debt for the city, which currently pays approximately $400,000 in monthly bills, which include payroll, insurance and numerous accounts payable items such as gas, electricity and repairs and maintenance. The city also is required to pay liability insurance, workman’s comp and other yearly fees.

In addition, the city has three bond issues including a Series A Bond Issue taken out in 2004 in the amount of $1,040,000, which the city will pay $162,449 for in 2011; half in January and the other half in July. A Series B Bond Issue was also taken out in 2004 to the tune of $3,878,600.73, which the city will pay $216,697.45 in 2011 with a one-time payment in September. The most recent bond issue was taken out in 2007 and was recently renewed in the amount $6,805,681.61. Payments on this bond issue are made as property is sold at Rivercane, based on a percentage of sale prices.

In addition to a sales tax increase, the city voted last week to increase the gas tax from 2 cents on a dollar to 3 cents, its lodging tax of 8 percent also increased two pennies to 10 cents on the dollar and the rental/lease tax increased three cents, from 2 cents to 5 cents.

The city earned $266,418.56 in lodging tax last fiscal year and has already earned $91,484.45 thanks in part to the success of Holiday Inn Express located in the Rivercane development. The city does not receive lodging tax from the 236-room Wind Creek Casino & Hotel.

But despite tough economic times, the developers of a Hampton Inn purchased building permits this week in hopes of beginning construction soon in Rivercane.

The new taxes will be implemented April 1.