City Council will likely choose between two banks from which to borrow $5 million for the Stryker Center construction Thursday.
Last month the city directed Davenport & Company, its financial adviser, to seek bids to fund the building to take advantage of current interest rates. James Sanderson, senior vice president of Davenport & Company, recommended two banks for the council’s consideration: Carter Bank and PNC Bank.
On Oct. 23, Davenport sent out requests for bids to 63 local, regional and national banks. The request specified the city was seeking either a 15- or 20-year locked-in interest rate.
That request, according to Sanderson, filtered out many banks, as most were not willing to offer a fixed rate for that long. Davenport received proposals from 10 of the 63 banks it solicited for the bond.
With the target of a 20-year fixed rate at under 3 percent set by Sanderson and City Manager Jack Tuttle, Davenport narrowed down the list of 10 banks to two: Carter Bank and PNC Bank.
Carter Bank would fund up to $5 million at 2.95 percent fixed rate for 20 years or 2.60 percent for 15 years. Sanderson said choosing the 20-year option would mean the city would pay an extra $6,000 in interests but payments would be smaller.
With Carter, Williamsburg can prepay at any time, there is no extra credit approval necessary and the bank wants to close on the loan by Dec. 15.
“If Carter Bank had not bid, your 20-year low fixed-rate would have been 3.95 percent,” Sanderson said to the council.
He also said that next to Carter Bank, the next lowest fixed 15-year interest rate was 2.75 percent.
For both the 15-year and 20-year options, the PNC Bank proposal shows up to $5 million would be funded with a fixed rate of 1.96 percent for seven years. After those seven years, the bank would have the option of extending the loan under its current terms or ask the city to either refinance or repay the remaining balance.
With the PNC proposal, the city would be subject to further credit approval, fees to pay off the loan early and the bank wants to close on the loan by Dec. 4.
Councilman Scott Foster wanted to know what the city had done in the past when given loan options like these. Tuttle said it has gone both ways but emphasized Carter Bank’s offer for a fixed rate.
“When you’ve got a very good rate, taking the risk out of it over a 15-year period, it’s awfully attractive,” Tuttle said
The city of Williamsburg is looking to build a new community center called the Stryker Center on the site where the Stryker Building now stands at 412 N. Boundary St. In addition to providing the space for the community events and meetings the Stryker building now offers, the new Stryker Center would house an expansion to the Williamsburg Regional Library.
City Council members have been reviewing construction and design bids since February and are still choosing between three design teams.
On Thursday, City Council Members are expected to vote on an option after a public hearing during their 2 p.m. meeting.
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- City Council Clarifies Needs for Proposed Stryker Center
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- City Recommends Original Stryker Center Proposal
