Construction on The Farm, a baseball and softball facility along Interstate 69, has hit another snag while city officials and project developers continue to negotiate acceptable financing terms.
Earlier this month, the Anderson Redevelopment Commission voted 4-0 to rescind its approval of a debt service reserve fund, which would be replenished with tax increment financing funds if needed.
"Effectively, the Redevelopment Commission under the new mayor rescinded that resolution, causing us to revisit financing for the project," said Brad Benbow, an investor in The Farm. "The second thing that has happened that's an issue is that the city has refused to release funds from the bond anticipation note, which was already being drawn upon."
The project struggled to secure permanent financing last year when bond sales failed to materialize. Eventually, Star Financial Bank agreed to buy the bonds, but only with the added security of the reserve fund.
The city had already guaranteed $6 million in bonds, plus a $1.5 million contribution by investors, to finance the $7.5 million project, and approved a bond anticipatory note for up to $4 million, to help get construction started.
Anderson's financial package was intended to show the city's support for the athletic park, which includes a 105,000-square-foot indoor facility and 12 baseball and softball diamonds encompassing 72 acres. The city announced the project in January 2011.
The city and the bank were set to close on the bond sale late last year, when The Farm developers announced the group didn't want to pay its $1.5 million contribution at closing, but in three installments, with the first payment to occur at the end of this month and two others to occur at later, unspecified dates.
The request was akin to someone agreeing to buy a house with an agreed upon down payment, and then showing up at the closing only to say they didn't want to make the payment, said a source close to the negotiations.
"Everything was set to go," said Ann Marie Bauer, an attorney who represents the Redevelopment Commission. "The project came back and said 'we don't want to put our whole equity infusion at closing.' There was definitely surprise."
The Ockomon administration rejected The Farm's proposal and canceled the bond closing, effectively throwing responsibility for final approval of the plan into the hands of new Mayor Kevin Smith's administration.
New City Controller Sam Pellegrino said he reviewed the proposed terms of the bond sale, and is asking The Farm to agree to an additional list of requirements including loan covenants, personal guarantees from investors, financial capability statements and financial reporting requirements.
"My job, as I define it, is to look out for the best interests of the taxpayers and what liabilities we may inherit," said Smith. "Everything we're doing right is focused on protecting the taxpayers from a financial perspective."
Nobody is saying The Farm isn't a good project, said Greg Winkler, Anderson's interim economic development director,
"The city certainly wants The Farm LLC to succeed," he said. "The question is how we find a more equitable way to share the risk and the reward."