This is Part II of a two-part series examining the Redevelopment Agency (RDA) program in Mesquite. By no means are these two articles the complete story. In fact, there's a whole lot we've left out, like the guidelines for RDA Grant Programs and design standards for the Downtown Central Business District. The City of Mesquite has a portion of its Web site devoted to the RDA program and you're strongly encouraged to access it through this Web link: http://www.mesquitenv.com/GeneralInfo/Redevelopment

Part I of this series examined how RDA funds are used in 'blighted areas' and which Mesquite businesses have received money under the program.

This article looks at where RDA money comes from and who approves payouts from the funds. The latter may surprise you.

The RDA Board, essentially the Mesquite City Council, meets Tuesday, Oct. 11, at 4:00 pm in the City Council Chambers. It's the first time the Board will meet under the new administration that took office July 1.

In fact, at Tuesday's meeting the RDA Board will take on a consideration of Barcelona Partners, LLC's request for an amended loan re-payment schedule of a June 22, 2009 Development Loan Agreement it has with Mesquite's RDA. Barcelona is the stalled, some say failed, casino project at the corner of W. Pioneer Blvd and Falcon Ridge Blvd. The RDA loaned Barcelona $2.5 million dollars in 2009 to build roads and sidewalks in the area. Even though Barcelona was given a firm repayment schedule at the time of the loan, it has missed many of its interest payments. City Attorney Cheryl Hunt sent a notice of default to the company in July. Barcelona is now proposing a new loan re-payment schedule to the RDA Board.

Where does the RDA money come from?

Aside from assessing a redevelopment tax on certain properties within a designated RDA District, the City has issued three bonds to pay for the RDA program. The chart below shows information about each one.

Issue Date	Interest Rate	Term in Years	Issue Amount	Principal outstanding @ 6/30/2011	Principal & Interest payments	Principal outstanding
5/14/2002	4.67%	20	$5,560,000	$3,685,000	$442,500	$3,420,000
4/13/2005	3.60%	20	$3,300,000	$1,300,000	$362,800	$981,600
6/29/2009	Varies*	15	$13,915,000	$12,715,000	$1,525,000	$12,050,000

According to Dave Empey, City Finance Director, the interest rates paid out by the City to bondholders of the 2009 bond vary between 4.0 percent and 7.375 percent. "The interest rates are all a function of timing as to when the bonds were sold. Those bonds are pretty high-priced, particularly in light of where things are today," he said.

Although the issue amount of the 2009 bond was almost $14 million, the City actually received $12 million for the program. "The $2 million difference was taken up in underwriting fees, reserves, and issuance costs,"

Interim City Manager Kurt Sawyer explained that there is approximately $4.9 million left in the 2009 bond fund that was approved by the City Council. This is the money he has suggested be used to help cover the costs of the proposed indoor sports complex.

At least 85 percent of the total bond fund has to be spent by June 29, 2012. So far, 80 percent has been paid out for projects like the new $6 million Police Department building on Hardy Way.

"Approximately, another $519,000 needs to be spent in order to comply with the terms of the bond," Empey explained. If not, he says there are implications for the tax-exempt status of the fund and for the bondholders. In turn, the City's bond rating could suffer, driving up future costs of potential bond issues.

Sawyer said "knowing that we had a deadline to spend the rest of the money, when I heard about the possibility of building the indoor sports complex, I put the two together and that's why we're proposing to use RDA money for the project." Sawyer has suggested using $2.5 million of RDA funds to help pay for the complex.

However, the entire remaining amount doesn't need to be spent by next June, just $519,000.

While the City collects approximately $30,000 per year in interest from the remaining money in the bond fund, it spends $160,000 per year in debt service. Empey gave three options for using the remaining money: "leave it in the bank and gain paltry interest rates until the day comes that we have to spend it; use it for a project that will potentially increase the City's economic activity and the vibrancy of the community; or the third alternative is to pay down the debt and save that interest expense."

City Councilman Kraig Hafen has suggested at times that perhaps the City should take the third option on the last 15 percent of the money and reduce interest expenses associated with the bond.

Empey said, "that's easier said than done. We would have to go back to the bondholders and get their approval. It's not just a matter of the City deciding to pay the debt back. There has to be a willing seller of the bonds. Under the terms of the bonds, we can't pay down any of that debt until 2013."

When asked whether there was a downside of spending the money on a 'good' project, Hafen said, "the key is to make sure you're spending it on a good project. If what you spend it on turns out not to be a good project, you're out the money you spent and you're still supplementing the RDA out of the general fund."

Some money for the program comes from RDA property tax revenue on certain areas of the City. To understand this part better, you really need to access the Redevelopment Map located on the City's Web site at the link we gave you at the beginning of this article.

"Tax revenue coming in from the blue area (on the RDA map) covers a portion of the debt service on the bond," Sawyer said. Some properties included in this area are the CasaBlanca, Virgin River, and Eureka casinos, and other businesses in the downtown area along Mesquite Boulevard.

"We actually have to pay a little bit of money out of our general fund to cover the RDA bond expenses." Sawyer said that's mostly because many of the properties have been devalued over the last few years. "When we did the bond, the properties were valued at very high levels. Now they don't have as much value, therefore, they don't pay as much in taxes as they did when the bond was issued. The casinos' values have been reduced as much as 50 percent."

"Collected taxes within the RDA districts go back into the community and not to the general fund," he explained.

Also, the RDA district map dictates which properties can receive RDA grants and for how much. For instance, some businesses in certain areas can receive 75 percent of a remodeling project's cost while others are eligible for only 50 percent of a project's cost.

Basically, that's where your head starts spinning when you're trying to understand the RDA program.

Who approves payouts from the funds?

"Budgetarily, we have thresh-holds built in at which point decisions are pushed to the Council within any budget account," Aaron Baker, an Economic and Redevelopment Associate in City Hall, said. In particular, the incentive program has its own thresh-holds, but they are pretty high.

In April 2009, the City Council amended the Mesquite Municipal Code and gave City Staff the authorization to approve building, remodeling and rehabilitation projects worth up to $99,999 and up to $30,000 for associated fees. Baker, Bryan Dangerfield, City Economic Development Director, and Richard Secrist, Planning and Environmental Resources Principal Planner, are the primary Staff members who approve project applications. They also have the authority to approve façade rehabilitation projects worth up to $50,000 and sign replacement projects up to $15,000.

Once those three approve a project, the City Manager has to sign off on it and then the Mayor must give the final approval of the project.

"The ultimate decisions on how to spend RDA funds rests with the RDA Board which is in all actuality, the City Council. We, the Staff, would like to change the code and have almost all the decisions made by the RDA Board/Council rather than us. Then we don't have to worry about questions and decisions," Sawyer remarked. "It's the perception people have about Staff making these decisions. Sometimes, we get tired of taking the heat and want to put it back on the guys that got elected."

"The Mayor does sign every single agreement that the City enters into though," Baker added.

Secrist explained one of the reasons why the Municipal Code was changed to allow such high thresh-hold approvals made at the Staff level. "The business community demanded a faster approval process so that's why approvals were moved to the Staff level. They didn't want to wait two months to get on the agenda for the next RDA meeting. They didn't want to wait three years to get paid. They wanted to get paid in 60 days. Council agreed to that."

According to Hafen, who favors returning all RDA fund decisions to the RDA Board (City Council), "If it's your own money, you can do it on your own time. If you're coming to ask for a handout, you might have to slow down a little bit. There is a difference between the two scenarios."

Susan Rosland, proprietor of the General Store consignment shop located at the corner of Mesquite Blvd and Sandhill Blvd, is a big proponent of the RDA Grant program. She applied for and received $25,206 in 2009. Because of the business's location, the property was eligible to receive 75 percent of the total project's cost. She is a tenant in the building so her landlord had to agree, which he did.

Rosland has said many times that other businesses need to take advantage of the RDA program. "It's not that hard to work through the process. And, it's so worth it."

Again, for more information about the RDA program, visit the City's Web site through this Web link: http://www.mesquitenv.com/GeneralInfo/Redevelopment