A $159 million bond issuance to fund the City Springs project was approved Oct. 20 by Sandy Springs City Council. Now the project just needs a final budget—in this case, a complicated spending plan that confused members of the council earlier this month.
City Councilman Gabriel Sterling was among several councilmen who asked for a better budget explanation from members of the city staff. He said he believes the explanation is coming soon and that core City Springs features are not at risk of budget cuts.
“I feel very comfortable with where we are,” Sterling said in a recent interview. “I’m confident we will have a very good briefing on this,” Sterling said, adding that “there’s no possibility of losing the big parts [of City Springs].”
City Springs is the massive redevelopment under construction on Roswell Road at the Mount Vernon Highway and Johnson Ferry Road intersection. It will include a new City Hall, a performing arts center, parks, housing and commercial space.
The bond issuance and a finalized budget were supposed to happen at the same time, but they are separate efforts. Mayor Rusty Paul and several councilmen expressed satisfaction at the bond issue details.
A total of $159,475,000 in bonds will be issued and will produce about $179 million in funds because of some “premium” sales at higher-than-face values, the city’s bond consultants said. The council previously authorized issuing up to $222 million in bonds—the expected maximum cost of the project—and can still do so, but only with a separate action.
The interest rates are complex, but have a total “weighted average” of 3.659 percent, according to advisers with the financial firm Raymond James. The city received credit agency Moody’s highest credit rating, “Aaa,” and the second-highest rating category from Standard & Poor’s, “AA-minus.”
The bonds, sold in denominations of $5,000, were put on the market on Oct. 20 for advance orders. That helped determine the rates approved by the council, City Attorney Wendell Willard said. He said that they were oversubscribed by $400 million, meaning that demand exceeded supply. The issuance was to occur in late October or early November.
“I bought a couple [of the bonds],” Paul said at the council meeting.
Not so clear is exactly how much of the funds will be spent and on what. The council already decided to spend no more than $222 million on the project, but a specific “maximum guaranteed price” will be set in consultation with Holder, the project’s construction firm.
That was supposed to be done Oct. 6, but the council balked at Holder’s request to delay setting the price and presented budget estimates that had widely varying line items—in one case varying from $75,000 to $1 million.
A clearer budget with the price cap was supposed to be delivered Oct. 19, but that didn’t happen, either. Sterling and Councilman Andy Bauman—two who previously voiced some strong concerns—said that they are not worried about taking a bit more time.
“Better to get it right than to get it early,” Bauman said of the budget. “It was more a timing issue than a budget issue…So far, I have no concerns.”
Sterling said the budget is inherently complicated and he believes it will make sense in the end. The exact timing of the budget report is unclear, but Sterling said the final design is down to dealing with small details.
“This is not the traditional model of building things,” Sterling said of the City Springs process, where a budget cap is set and the project tweaked to match it on the fly. “By doing that, we’ll actually end up saving money because we will do the building faster. We could have complete clarity on the front end, but it could cost us more money and take more time.”
However, there is also a question about whether parts of City Springs will be cut from the final design. At the Oct. 6 meeting, consultant Ennis Parker surprised the council by saying one piece of the project—a parking lot off Mount Vernon Highway—might have to be cut. That lot and a park on the east side of Roswell Road were “bonus” projects added to City Springs in June.
Asked about whether core parts of City Springs could be cut as well, Bauman and Sterling had different takes. “I don’t want to speculate on scope,” Bauman said.
“No. There’s no possibility of that,” Sterling said, adding that the main site’s infrastructure will be in place within a few months. “There’s no turning back from that. We couldn’t decide we’re not going to build that performing arts center, or make it smaller.”