Jacob Dimond / jake@yelmonline.com
During a Yelm City Council study session on Tuesday, March 3, several of the City of Yelm’s leaders provided an update on Blue Fern’s development of a 640-acre property, as well as an update to the Southern Loop project.
According to Mayor Joe DePinto, the Southern Loop would be an expensive but logical project and he noted the pathway forward to this project is through Blue Fern’s development.
Yelm City Council voted 6-1 last November to allow Blue Fern Development to pay the City of Yelm a minimum of $16.5 million and a maximum of $18.55 million for the 640-acre property and its development over the next 12-to-19 years.
With that in mind, the City of Yelm has been exploring different routes it can take with its bond capacity in an effort to find a solution to pay for the potential Southern Loop project.
“We need a way for all of those houses that have been up there in the Yelm Medical Plaza area to punch out towards Rainier. There’s a lot of housing up there,” DePinto said. “We need more roads, but it costs money. Part of that bond capacity, something we’ve been exploring is how much we have and how much would potentially count against us even though growth is paying for this.”
Todd Stancil, Yelm City Administrator, said the two pieces of this project that are important to the city are securing a non-recourse bond and that the project doesn’t count against the city’s bond capacity.
“The estimated cost of this road is, well, anything between $30 million and $50 million to build a 3.2-mile road with all of the infrastructure beneath the ground,” Stancil said. “The road is 110-feet wide. It’s a huge, huge road. This whole time we’ve been working diligently to make sure that’s how it would be.”
DePinto added that it’s been expressed to Blue Fern Development that this project isn’t going to work out if they’re going to be taxing all of Yelm for this project. He added that Blue Fern Development’s President has reiterated they’re on the same page.
Stancil added that Blue Fern Development has only accounted for the development on its 640-acre property, and didn’t include any potential development occurring on DDD’s property — which sits at 610-acres.
“When they factored in the development plans of Blue Fern, the amount of tax revenue over the 25-years that would be brought in by the increased tax revenue, just that development on the 640 was enough to pay for that entire road,” Stancil said. “If DDD was to start to develop their land, that would be paid off much quicker. The bond would be paid off even quicker as those properties got built.
“We had a meeting with Blue Fern last Thursday. They have their own bond attorney they use to factor in these different developments. The city has our own bond attorneys that we use to basically sign off on city bonds,” Stancil added. “They have to make sure they’re legitimate and we can pay for them. They do all the studies to make sure everything is the right way.”
During that meeting, Stancil said the word from Blue Fern Development was that this project would have a non-recourse bond, as well as a bond that didn’t count against the city’s debt capacity.
“We were super excited on Thursday. We did not share that excitement on Monday,” Stancil said. “We met with our bond attorneys on Monday. There are differing opinions on the debt capacity and it counting against our debt capacity.
“As of right now, both sides agree that it could be a non-recourse bond — which is huge and works great for us,” he continued. “The city doesn’t have the liability of that. The second piece — it has to be a bond that does not count against our debt capacity. Even if we maxed out our debt capacity, it’s not enough to build this.”
DePinto added that Blue Fern Development would take on the debt responsibility, and that it wouldn’t be the City of Yelm.
“If we did a bond against our debt, we could get, let’s say, a 4% interest if we built this building, for example. The way they do these non-recourse bonds is they sell them to private bond owners,” Stancil added. “The only way to sell them to private bond owners is if they have a higher interest rate. The risk is on the bond holder. If you buy a bond, you’re betting on Blue Fern to finish this project. If, in fact, it does happen, and you buy the bond and it does build out, you would make a fair amount of money off the bonds you bought because of that interest rate attached to it.”
Stancil said the city is “turning every stone” to find out how this project can count against the debt capacity, if it counts against the debt capacity, and if it does, how could this project be separately financed?
