City approves $57.6 million bond for Community Spaces Plan

The Community Spaces Plan is now funded after the Vestavia Hills City Council approved a $57.58 million bond issue at a specially-called meeting tonight.

The proceeds from the bond will fund a series of recreation, public space and infrastructure improvement projects that were determined in public forums and surveys over the past year. City Manager Jeff Downes said survey and design work has already begun, and a bid will be awarded for an initial construction package at Wald Park, which only includes part of the work planned for the park, by September.

The bond will be paid off over 30 years through revenue from the 1-cent sales tax increase that went into effect on June 1, with a 3.65 percent interest rate. Downes said the first month of tax collection since the tax increase went into effect showed revenues of $1.49 million, of which 25 percent — or $372,000 — is allocated for the Community Spaces Plan fund.

Based on this and sales revenue trends for the city, Downes said the 1-cent tax is expected to generate $4.47 million annually. Since debt payment on the bond will be $3.17 million per year, Downes said the remainder of the new sales tax revenue can be used for other city purposes.

The firm Rice Advisory handled issuing the bonds on the market today. Chris Williams of Rice Advisory said this was "very successful" and noted that the interest rate was low. With the new debt added to the city, Williams said Moody's maintains the city credit rating at its triple A rating and Fitch Ratings kept the city at double A+ but upgraded Vestavia's outlook from "stable" to "positive."

Mayor Ashley Curry said the fact that the city was able to maintain its credit ratings with this large debt addition was “incredible and I think it’s a credit to our city manager and to the finance department.”

In addition to the bond debt, Vestavia has an additional $4.1 million in annual debt service.

Williams said the special meeting had to be called for the same day the bond issuance was put on the market in order to secure the funding and avoid possible market changes influencing buyers or interest rates.

"Our grandchildren will benefit from what we’re doing tonight,” Councilman George Pierce said.

“It’s a great first step, but the work’s just beginning,” Councilman Rusty Weaver reminded the council.

The vote to approve the bond was unanimous. The City Council will have its regular meeting on Aug. 13.