CRIZ Authority initiates process to borrow $5.4 million by year's end

The Lancaster CRIZ Authority on Tuesday took the first steps toward borrowing money under the state’s City Revitalization & Improvement Zone program.

Authority members unanimously approved two motions, one appointing the law firm McNees Wallace & Nurick as bond counsel, the other authorizing Concord Public Financial Advisors to seek proposals from banks to provide the authority $5.4 million in financing.

Concord is a municipal financial advisory firm with offices in Lancaster and Reading.

Of the $5.4 million, $3 million would go to Conestoga Plaza, a project being developed on South Duke Street by the SACA Development Corp., an arm of the Spanish American Civic Association.

The remaining $2.4 million is to go toward the first four installments of the authority’s payments to the Lancaster County Convention Center Authority.

The authority has committed $5 million over seven years to help fund the convention center’s ongoing furniture, fixtures and equipment expenses.

The first two installments are $500,000 each and are due by the end of the year. The payments rise to $700,000 in 2016 and 2017.

The plan is for the CRIZ Authority to pay back the borrowing with funds from the “CRIZ increment” — the yearly increase in business taxes in the city’s revitalization zone, as compared with the baseline level established in 2013.

This spring, businesses in the zone filled out forms for the state to calculate the 2014 CRIZ increment. The authority expects to find out the result Oct. 15, said Randy Patterson, city director of economic development and neighborhood revitalization.

Authority members asked if it would make sense to wait until then to approach banks, but Patterson said the process needs to begin.

“We won’t meet our commitment to the convention center if we wait,” he said.

The CRIZ increment is expected to increase over time, so the authority plans to structure its 25-year repayment plan the same way, Patterson said.

According to a preliminary structure put together by Concord, repayments would start at about $360,000 the first year and grow by 1.5 percent annually, reaching $510,000 in 2040, Concord’s Daryl Peck said.

Principal payments are being “pushed off” in ascending-payment schemes, so they result in somewhat higher total interest, Peck said: in this case, about $17,000 a year on average, according to Concord’s projections.

The note would be prepayable without penalty, he said.

The final details of the borrowing terms will depend on negotiations with banks in coming months.

The meeting was the authority’s first since March and only the second this year. The next meeting is Sept. 22.

Source: Lancaster Online