One who intends to leave others better off for his having existed.

12/8/13

A discrepancy by reported interest costs for GPAC and projected interest for the Wyndham parking lot

The developers are saying the municipal financing for the hotel may cost about 5% or 5.3% in the following from their proposal;


This graph shows average interest rates for "GO", or general obligation bond over the last couple of years.  The bonds the developers proposed, and what Greensboro's City Council voted for, are more risky than GO bonds, and therefore should have higher interest rates associated with financing;


On September 5, 2013, I received the following from the City of Greensboro on the expected costs of the GPAC debt, as interest rates had spiked, and received the original information from before rates rose;

"Hello Mr. Hartzman:

The 2 year variable interest cost during the GPAC construction phase is estimated at $340,000 to $350,000. Overall financing costs of the City’s $30M portion of the $60M GPAC project is estimated at $51M ($30M principal and $21M interest over 27 years at 4.5%), including the 2 year initial construction draw period at a variable rate.

Also, the City has created a website devoted to the GPAC which provides additional information. It can be accessed via the following link: http://www.greensboro-nc.gov/gpac"

Sincerely,

Public Information Desk
City of Greensboro
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0.5% more interest over 27 years (4.5 + 0.5 = 5%), means city taxpayers may be on the hook for another $2,076,787.32 or more at 5.3% in interest costs than the city is currently saying.
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PS, for there to be only a couple hundred thousand of expenses in years 26 to 50 for the parking deck with 8 floors of hotel above seems unrealistic.

Also looks like only $27,000,000 is being invested in the property, so the city would be giving Randall and friends about a third of the expected costs.

1 comment:

sal leone said...

The problem I have with all the numbers the City puts up with GPAC or parking is that they are all hopes. The fact is that no one can say for sure how many people will come to a show, where they will park or how much they will spend eating, so it is as risky as Columbus setting sail to find a new world based on HOPE.