Stifel Nicolaus recommends Crestwood not refund Watson Plaza TIF notes

City will also convert vacant accountant’s position into assistant finance officer


The underwriting team of Stifel, Nicolaus & Co. Inc. has recommended that the Crestwood Board of Aldermen not proceed with plans to refund tax-increment financing notes for Watson Plaza into a bond issue.

But Stifel Nicolaus officials believe that aldermen should issue transportation development district bonds for Crestwood Point — the site of Kohl’s — within the next 60 days.

Representatives from both Stifel Nicolaus and bond counsel Armstrong Teasdale, which has recommended the issuance of TIF notes at Watson Plaza, were scheduled to speak with aldermen during a work session before the board’s meeting Tuesday night — after the Call went to press.

Aldermen are scheduled to discuss the Watson Plaza TIF bonds and their deal structure during another work session scheduled before the board’s July 25 meeting. The Board of Aldermen tentatively is scheduled to vote on the TIF bonds issuance Aug. 8.

Aldermen should deny the TIF bonds at Watson Plaza to save the city an estimated $81,000 in issuance costs, according to Stifel Nicolaus Senior Vice President James Lahay. Such a denial also would mean the city would not have to fund a debt-service reserve of $80,000 with bond proceeds.

In a memo to City Administrator Frank Myers, Lahay stated that if aldermen were to approve taxable TIF bonds at Watson Plaza, the city would suffer because of an increase in interest rates on the TIF.

Therefore, the vice president of Stifel Nicolaus believes the city would be in better shape by paying off its existing TIF obligations. This would make it possible for more TDD revenues to be generated, which Lahay said can be used to finally pay THF Realty the funds it is owed for the Kohl’s redevelopment plans.

“If both TIF and TDD Bonds were to be issued at this time, this triggers what is known as anti-abuse regulations,” Lahay wrote in his memo to Myers. “Therefore, one of the issues must be taxable. From an economic standpoint, the choice would be to issue taxable TIF Bonds since the issue size is the smaller of the two — $1,790,000 compared to $3,145,000. From the city’s standpoint, the issuance of taxable TIF bonds would make no economic sense because it would increase the interest rate from 4 percent to approximately 7 percent.

“In our judgment, it is appropriate to issue TDD bonds at this time which are sized to the maximum. The existing TIF notes will pay off in a relatively short period of time, most likely in late 2009. Once the TIF obligations are fully repaid, the TDD receives all of the TDD revenues. It is estimated that THF will receive approximately $500,000 in payments on its TIF Notes in the next year and obtain a sizable reimbursement from TDD bond proceeds. As you know, THF has already expended significant amounts of its own funds on reimbursable project costs and they are anxious to be reimbursed.”

Watson Plaza recently has seen the opening of Shop ‘n Save. On June 27, the developer, G.J. Grewe Inc., submitted to the city a Certificate of Substantial Completion and is requesting a bond issuance of $2.35 million to refund the TIF notes approved in February 2005 by aldermen for the redevelopment project.

Crestwood Economic Development Specialist Ellen Dailey estimates that the $2.35 million TIF bond issuance for Wat-son Plaza would be retired in four years. And because the TIF bonds have been requested as a private placement, her reports indicate that the city should see some cost savings.

The Board of Aldermen originally authorized the issuance of $2.35 million in tax-increment revenue notes for Watson Plaza in February 2005. Slightly less than $1.14 million in TIF notes have been issued to the developer since that time, according to reports from Dailey.

City staff members are set to solicit proposals from lending institutions so Crest-wood can find the most competitive rate for TIF bonds if they are approved by aldermen.

Board of Aldermen President Jerry Miguel of Ward 4 said while he still is considering the approval of any bonds, he does not feel comfortable at this time with Armstrong Teasdale’s record keeping, which he believes is out of date with the city’s bond needs.

Until such records are brought up to speed with this year, Miguel said he would have a hard time approving the issuance of any bonds.

“I looked through the information that was made available to me (at Armstrong Teasdale),” Miguel said. “As I recall, I did not see any minutes or financial statements for the past two years. So, it appeared to me that there’s some paperwork that … that the TDD board needs to meet and bring things up to date before we proceed with any bond issuance.”

The Board of Aldermen also was scheduled to consider lifting the city’s hiring freeze Tuesday night to hire a seasonal code enforcement officer, a crossing guard for Long Elementary School and an assistant finance officer.

While Police Detective Len Appelbaum will temporarily perform the duties of seasonal code enforcement officer, Myers is recommending that the board hire a part-time officer to fill that role.

The position of accountant now will be changed into the title of assistant finance officer and features a new job description. The change is set to come soon as Crestwood Accountant Michelle DePew leaves her post Friday to work as the finance director for Manchester.

The new position of assistant finance officer will pay $43,637 — the same level of pay for the city’s accountant position.

The city currently is without a finance officer, and reports from Myers indicate that the new job of assistant finance officer is part of a larger reorganization of Crestwood’s administration that aldermen will know more about by the end of July. The job calls for a four-year degree in accounting or business and four years of relative experience or a combination of education and experience.

The job summary for the new position states that the assistant finance officer “is responsible for overseeing the daily administration of accounting, accounts payable and payroll procedures, aid in preparation of financial statements, daily cash management and banking relations, monitoring expenditures of city funds for budgetary compliance, and various other financial analysis projects including development of policies and procedures and preparing and completing audit process. In absence of finance officer, ensures smooth operation of division.”

Myers’ job description for the new position of assistant finance officer also details examples of duties, which include:

• Perform daily accounting, accounts payable and payroll functions including the maintenance of the city’s funds and accounts, prepare journal entries, process daily revenues and review accounts payable report. Oversee daily cash management and maintain banking relations. Oversee the biweekly payroll process and procedures including the review and approval of the preliminary payroll register, payroll cash and taxes and accruals.