COLUMBIA, S.C. — As development of the Bullstreet District pushes on, the City of Columbia has decided how they want to pay for the construction of its first two parking garages: by borrowing $16.5 million from the city’s retiree benefit fund. It's called the Other Post Employment Benefits fund or OPEB.
"To the city, it’s going to save us approximately $4.6 million. It also gives us complete control without having to set up some sort of a lease with the developer," explained the city's chief financial officer, James Palen. "In addition to that, to OPEB, the funds that are used for that, we’re guaranteeing a rate of 1.5 percent. To put that into numbers, nine to 10 years from now, that will generate earnings of not just returning the $16.5 million, but it will also generate earnings of $2,648,000 that will all go into OPEB."
Palen said in the city council meeting Tuesday that this plan is a "win-win" because the fund is estimated to gain around $1.5 million in interest over 10 years.
But some citizens are concerned the funds won’t be paid back as planned.
"There’s a fear, and the fear has a lot to do with the environment we’re in and that we’re already expecting lower revenue streams and how we’re going to juggle all that," said Council member Daniel Rickenmann. The environment he's referring to is the pandemic.
Palen said he understands the concerns but since the city will be paying itself back, they don’t have to worry about an outside company not being able to come up with the money.
Councilman Howard Duvall tells News 19 that borrowing the funds will have no effect on city employees that plan to retire soon. Mayor Steve Benjamin agrees.
"Obviously, we live in a time right now where a lot of folks are concerned about a lot of different things and it’s warranted. But this is a very smart, conservative approach that's of more significant long-term benefit to our folks," said the Mayor.
The city has given a six to one approval to how they’ll fund the first phase of BullStreet parking garages. It will need to be approved twice more and submitted to public comment.
Once the city’s plan is approved, construction on the parking garages is expected to start early next year.