Town of Canton officials faced a “sink or swim” moment Jan. 3 when, in a special public hearing, they had to decide whether or not to move forward with plans to seek commercial financing for the town’s beleaguered pool project.
Mayor Mike Ray and town aldermen didn’t really have much of a choice; after securing two substantial grants and committing $500,000 of the town’s fund balance to the project’s estimated $2 million cost, they were stunned to learn that they wouldn’t be able to count on a $1 million USDA loan as part of their funding package when the federal agency reallocated funding for the loan program earlier this fall.
Without commercial financing to plug that hole, the project would have no hope of moving forward. Given that the current pool cannot be reopened under its current conditions, aldermen either had to face the first summer without a public pool in Canton in more than 70 years, or take the loan terms offered.
“If the current pool project was abandoned and there was no longer a municipal pool, that action would betray not only Canton’s future recreational opportunities, but also the great memories families and citizens associated with our pool’s past,” said Alderman Zeb Smathers.
Two banks responded to the town’s request for proposals. Unfortunately for the town, Asheville-based HomeTrust Bank’s proposal was immediately disqualified due to its attempt to collateralize something other than the pool itself.
Canton Town Manager Seth Hendler-Voss said that the Local Government Commission — whose approval is needed for the town to move forward on the pool — wouldn’t consider such loans.
That left Winston-Salem bank BB&T as the sole responsive bidder. BB&T’s terms, however, ended up being a blessing in disguise. The USDA loan would have had a 3.25 percent interest rate over a 40-year term, but the commercial loan’s terms offered a 2.89 percent interest rate over 15 years, saving the town thousands in interest.
However, the shorter loan term from BB&T would require higher yearly payments by Canton than the 40-year USDA loan would have required. It was this point — the higher yearly payments — that caused the most consternation amongst the board.
Much like a family sitting around the table trying to fit a new purchase into the household budget, aldermen recognized the need for the loan, and felt the payments were generally affordable, but were worried about making those payments should a natural disaster, economic downturn or other unforeseen calamity occur between now and 2032.
BB&T offered a loan of $1 million, of which Hendler-Voss estimated the town would need $775,000. With that amount as principal, he said the town’s first-year payment would total about $74,000. Over time as principal is reduced, the payments would drop to the low-$50,000 range near the end of the term. The USDA loan payments would have been about $45,000.
Hendler-Voss countered board concerns over possible future revenue fluctuations by proposing a number of spending solutions that would help mitigate the town’s outlay.
Several one-time payments — like the $30,000 budgeted for town rebranding and the $45,000 incentive to Western Carolina Freightliner — won’t be repeated next year, he said, adding that the town was also poised to retire long-term debt on some equipment in the coming years.
The board seemed pleased by these options and didn’t receive any public comments on the proposal. Aside from Alderman Gail Mull’s husband Doug and Canton Recreation Program Coordinator/Certified Pool Operator Keith Corbeil, not one person showed up to the meeting.
Thus with a motion by Alderman Ralph Hamlett and a second by Mull, the board unanimously resolved to pursue BB&T’s offer.
“Between the absence of one-time payments and the impending retirement of some long term-debts, my confidence the loan payments won’t become burdensome rests on what the ‘knowns’ are at this time,” said Smathers. “Any project can be delayed if decisions are based on the unknowns. Though we will suffer setbacks, I have full faith in Canton’s future and its citizens. If problems arise, it’s important to be flexible and adjust our priorities if need be. The pool project was a priority of the town board and the mayor because it is a priority of our citizens. I’m also confident that this project will be the first step in a reenergized recreation program and opportunity not just for Canton, but all of Haywood County.”
The loan will become part of a funding package that involves more than a dozen entities and plenty of grassroots supporters.
Since spring, the town has been selling commemorative bricks that will help pave the way to the new pool, literally and figuratively. Corbeil, who’s taken up the task of selling the bricks, said that sales are going well, and bricks are still available for purchase through the town.
Two grants — one from the N.C. Parks and Recreation Trust Fund and one from the Glass Foundation — will total $400,000 toward the project.
More than $300,000 will come from sponsorships and private donations, including a $200,000 sponsorship by Champion Credit Union in exchange for naming rights.
Also passed at the meeting was a motion authorizing town officials to ask the Haywood County Board of Commissioners for a contribution toward the pool.
Data cited by Hendler-Voss states that a full 70 percent of pool users aren’t from Canton and therefore pay no taxes to help support the pool, but do purchase tickets at the same price as Cantonians.
While it’s supposed that the bulk of that 70 percent comes from within Haywood County, commissioners declined to entertain such a request last year.
This year, on Jan. 3, Brian Broom of Asheville accounting firm Dixon Hughes Goodman reported to the commissioners that his firm’s audit of the county’s 2016 Comprehensive Annual Financial Report (CAFR) showed the county’s fund balance had increased from about 24 to about 27 percent since 2015. Broom said that the state becomes “very concerned” when fund balances approach 8 percent, and the county’s own policy calls for a fund balance of at least 11 percent.
Published by Smoky Mountain News on January 11, 2017.