On August 21^st, the Town Council approved issuing a 70 million dollar Payson debt bomb bond by a six-to-one vote.  The day before, on the 20^th, there was an updated presentation on the Aquatic Center.  The Council will press on the course of action regardless of apparent risks or dangers.  Damn, the torpedoes!

The vote was anticipated to be 6 to 1, maybe 5 to 2.  There are about 16,360 people in Payson, the median age is 59, and an average of 2.1 people per household, or 7,558 households.  The total debt, $112 million, works out to be just shy of $15,000.00 per household over twenty-five years.

Transparent Payson has never been against a community center.

We think the Payson debt bomb should have been placed before the voters.  It’s not a radical idea.  The Aquatic Center is lovely; it includes a recreation pool with five lanes, a slide, an indoor court, and a walking path.  We can get six lanes for a mere $2 million more!  The “high-level estimate,” excluding land, appears to have a price tag of $45 million plus or minus.  We have long valued such a center above $50 million.  One item of note on the surveys, they took places far from Payson.  They also did not discuss the number of “none” responses, exceeding other options in one survey phase.  No doubt, contracts will be entered before the current Council leaves.  The bond’s passage will trigger moving the aquatic center forward.  The original RFP for design went out just about a year ago.

Payson “Scientific” Survey Area:

Payson Aquatic Center Costs:

The Payson debt bomb passing was almost necessary.  As a practical matter the Town has made obligations and has spent money of late that force passing the bond.  The bond allows reimbursement of previously incurred general fund expenses, including land east of the Town complex, professional fees, and land at the rodeo grounds.  That information, excluding costs, can be found in Resolution 3359.  The total reimbursement is not yet known.  For this example, we will assume $7m.

More importantly, the Town entered into an agreement with Payson Regional Housing Development for three acres adjacent to their existing land of Green Valley Apartments.  We discussed that deal in detail here and the passage of Resolution 3375.  That lease became effective when the Arizona Department of Housing awarded Payson Regional Housing Development tax credits.  The ground lease and purchase agreement terms require the American Gulch Project to be completed.  The Town appears contractually obligated to remove the three acres from the existing floodplain. The entire American Gultch issue and apparent private gains were discussed here.   The anticipated cost is stated as $9m.  With modest cost overruns, that cost is closer to $11m.  Failing to pass the bond may have resulted in a breach of contract claim by Payson Regional Housing Development and no additional affordable housing in Payson.

The bond has an apparent dead pool requirement of about $9m.  Acquisition costs are not disclosed.  Previously Stifel stated 3.5% during CIPCAC meetings.  The total bond costs, insurance, etc., are expected to be around $3m.  From our review, the total encumbered monies is $30m.  When we take a $70m million issuance and subtract the encumbrance, the total available funds will be $40m.

When we look at the list of items on the Staff report for Ordinance 964, discussed here, they appear undervalued.

Upon receiving the CIPCAC recommendation, the Town Council added the following two projects to be funded by an excise tax bond:

Ordinance 964‘s total is $54.3 million.  The Ordinance undervalued the aquatic center by $16 million, a 55.17% increase.  Assuming a similar increase on all items, the total is just under $85 million. The public has been sold on a $45 million project to support the bond.  We are hopeful money will be left for Public Safety Facilities, Deferred Maintenance, Rumsey Park, and Roads.

A transparent allocation of proceeds, ranked in order of expenditure, would have been helpful before the bond was agreed to.  The Town has a history of deceit in prior allocations of funds, and details like that should have been addressed.

Don’t be surprised if the list of promises grows smaller and the costs grow larger.

The Payson debt bomb?  It is here to stay.

Your money.  Your Debt Bomb. Not your land.  NOT your vote.

Resolution 3359

Resolution 3375