City of Devine borrowing “$1 million to purchase 4 airplane hangars,” news revealed in open session

Part of the mystery is out. The City of Devine Council voted to approve of the issuance of $1 Million dollars to “purchase four airport hangers” by issuing certificate of obligation using taxes and a lien on pledged revenues of the airport system. As the financial presenter described the difference in a 13 or 15 year loan he mentioned “the $1 Million for the purchase of four hangers at the airport”. Mayor Cory Thompson fell silent for a few moments before stating, “That was not talked about in open session, it was in execution session, that we are paying $1 Million for 4 Airport Hangers. It was talked about in executive session, but I guess it is good that the public knows now”.

Earlier Mayor Thompson had let the crowd know he was not particularly in favor of all of this and the use of, what’s the word?… to which someone threw out “eminient domain”. “Yes, eminent domain”, he replied.
The council voted unanimously to go with the 15 year amortization plan of the airplane hanger purchase scenarios. The end cost is estimated at $1,167,384 vs the 13 year plan that came in at $1,301,925. Taxable interest rate calculated at 3.00%. Final true interest cost 1.898%.
Potential Revenue
Potential Revenue, annual hanger revenue totaled $60,000, for the 10 airplane hangers out there. See chart. Existing revenue for the six hangers already being used is $17,000. Proposed revenue for other four hangers: Hanger 5 was $12,600, Hanger 7 was $6,000, Hanger 8 was $6,000, Hanger 8a was $6,000 and Hanger 10 was $17,400. For at grand total of $60,000 per year.
Based on preliminary taxable values of $221,164.211 a $20,000 shortfall would require a $0.009 I&S tax rate to cover the payment.
The intent of the obligation of the maximum of $1 million is for the purpose of providing funds for the payment of contractual obligations of the City to be incurred to (1) design, develop, construct, equip, renovate, enlarge, extend and improve capital improvements to the Devine Municipal Airport (the Projects); and (2) pay all of or a portion of the legal, financial and engineering fees in connection with the Projects and the costs of issuance relate to the certificates.
By Kathleen Calame

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