The Birmingham City Council will meet in the next two weeks to work on plans to ask voter approval for a $75 million general obligation bond issue, according to the Birmingham News.
Mayor William Bell first proposed the idea late last year to finance general municipal projects.
Local issuers in Alabama are required to hold a referendum in order to sell bonds. Issuers can also sell warrants, which do not require voter approval.
Bell asked for a meeting with council members to discuss specific projects that will be funded with proceeds of the bonds. He wants a referendum to be held early this year.
Birmingham has capacity to issue the debt from an ad valorem tax that is dedicated solely to the payment of GO bonds, finance director Tom Barnett said in a recent interview.
Last month, the Public Athletic Cultural and Entertainment Board created by the City Council closed on $64 million in bank loans that were privately placed due to concern that the recent bankruptcy of Jefferson County would make it difficult to seek financing in the bond market. Birmingham is the county seat.
The bank loans are financing a new ballpark for the minor league Birmingham Barons baseball team, a double-A affiliate of the Chicago White Sox.
Birmingham was attempting to finalize the ballpark financing when Jefferson County filed the largest-ever municipal bankruptcy on Nov. 9, so officials opted to do a private placement, Barnett said.
“You never know until you test the market, and we just didn’t want to take a risk that there would be a problem,” he said. “We just planned around that with the bank financing.”
The 30-year bank loans for the ballpark closed Dec. 15 with a true-interest cost of 3.09%, he said. A $60 million loan was placed with the Spanish bank BBVA Compass, and $4 million was placed with the Atlanta-based, minority-owned Citizens Trust Bank, which has a branch in Birmingham.
Barnett said he does not anticipate any long-term adverse impacts from the county’s Chapter 9 filing.
Birmingham has about $250 million of GO bonds outstanding, which are rated in the double-A category by all three major rating agencies.
Jefferson County has $4.23 billion of outstanding warrants that have been affected by its bankruptcy.