BJCC moves to insure bonds
Thursday, June 16, 2005
ROY L. WILLIAMS
News staff writer
Birmingham-Jefferson Convention Complex and city officials are flying to New York for a Friday meeting to explore whether insurance can be obtained on bonds issued for the proposed dome project.
BJCC Interim Director Jack Fields, along with financial adviser Jim White of Porter, White & Co., will be accompanied by a financial analyst and a bond attorney representing the City of Birmingham.
At Wednesday's BJCC board meeting, Fields said the meeting with Financial Security Assurance Inc., or FSA, should provide an outside opinion on a proposal Birmingham Mayor Bernard Kincaid said is critical to getting $8 million in annual city funding for the dome.
Plan not acceptable?:
City Attorney Tamara Johnson, writing on behalf of Kincaid, said in a May 25 letter the city can make its financial commitment only if the BJCC leases the facility back to the city for the $8 million a year the complex seeks. The city would use $3 million from occupational tax, $2 million from a city lodging tax and $3 million from an as-yet-unidentified source to pay the $8 million.
BJCC Board Chairman Clyde Echols and Fields said the BJCC is worried it would not be able to issue the $566.5 million in bonds it seeks to finance the dome under such an arrangement.
"We'll hear what the bond insurance group has to say about the mayor's proposal," Fields said. "We anticipate being told this type of proposal will not be acceptable."
That might send Kincaid back to the drawing board on a funding plan for the city's share of the project.
Seeks AAA rating:
The BJCC is interested in bond insurance because it would assure investors the dome bonds are a worthy investment, White said. If FSA provides guaranty insurance, the BJCC bonds would take on FSA's AAA rating. That would make it easier for the complex to attract investors and obtain cheaper financing, he said.
"For a bond purchasers, it means they wouldn't have to go to various sources to gauge the strength of our bonds," White said.
FSA met with the BJCC a few years ago, but the BJCC funding model has changed significantly since then, White said. "We're going to bring them up to date and to get their opinion of our funding model," he said.
BJCC lawyer Tom Stewart said Wednesday that he has had two or three meetings over the past two weeks with city officials trying to work out an agreement. He said it is critical to get funding agreements signed by the city and Jefferson County before a special session of Alabama lawmakers expected to begin in late July.
Fields said if the funding issue is not resolved by late summer, the BJCC may require more money to build the dome because of rising construction costs.
E-mail:
rwilliams@bhamnews.com