The City of Rehoboth Beach is proposing a $17.45 million construction project to demolish and replace aging City Hall buildings and offices. The project will be funded by interim financing at 1.75% interest until a $18 million USDA loan closes. The 25-year USDA loan will have annual payments of $1,092,150. Existing loan payments will retire in 2017, providing over 2/3 of funding needed. Additional revenue sources can fund the remaining $360,000 without raising taxes. The project will demolish old City Hall, police station, restrooms and offices and replace them with a new complex.

1. City Hall Funding
Sam Cooper
City of Rehoboth Beach
May 4, 2015

2. What will be demolished?
• Existing City Hall
• Existing Police Station and 911 Center
• Existing Convention Center Restrooms
• Parking Administration Building
• Main Street Offices
• Parking Meter Building (Old water plant)

3. What’s included?
• New City Hall
• Administrative offices
• Building and Licensing Department
• Aldermans Court
• IT Department
• Commissioners Meeting Room
• New Police Station w/ 911 Dispatch Center
• New Convention Center Restrooms
• New Parking Department Building
• New Main Street Offices

4. What is the cost?
• The Estimated cost is:
$17,450,00
• This includes:
• All architectural and engineering fees and other soft costs.
• Bidding and construction contingency of $1,014,000.
• Owners contingency of $258,000.
• An allowance for furniture, fixtures and equipment of $538,000.
• Re-skinning of the Convention Center exterior to match the new
construction will add $358,000 to the cost.

6. How will this project be funded?
• The City is making application to the USDA for a loan in the amount of
$18,000,000 as follows:
• Can carry a term of from 20 to 40 years. We are looking at 25 years.
• If approved before June 30, 2015 the interest rate would be 3.5%. Rates are
recalculated quarterly and could go up or down.
• Payments can be made annually, semiannually or monthly.
• USDA closing occurs at the end of the project necessitating interim financing.
• Interim financing would be obtained from a local bank yet to be
determined as follows:
• I believe the interest rate would be around 1.75%.
• Funds would be drawn only as needed.
• Term would be approximately 2 ½ years.

7. What does the interim financing look like?
Quarter Balance Interest Rate interest Yearly Total
FY16 3rd $1,500,000 1.75% $6,562.50
FY16 4th $4,500,000 1.75% $19,687.50 $26,250.00
FY17 1st $7,500,000 1.75% $32,812.50
FY17 2nd $10,500,000 1.75% $45,937.50
FY17 3rd $13,500,000 1.75% $59,062.50
FY17 4th $16,500,000 1.75% $72,187.50 $210,000.00
FY18 1st $18,000,000 1.75% $78,750.00
FY18 2nd $18,000,000 1.75% $78,750.00 $157,500.00
Total $393,750.00

8. What does the final financing look like?
Following is based on loan with USDA
• 25 year term
• Annual Payments
• Payments starting September 1, 2018
• $1,092,150 annual payment
• There is no prepayment penalty
• Going to a 30 year loan would decrease annual payments to $978,700 or
an annual savings of $113,450 but would add 5 years of payments.
The City will continue to investigate less expensive funding options until closing on final
funding.

9. How will repayment be funded?
• The City has a current loan that funded the Rehoboth Avenue
Streetscape project, the first phase of Boardwalk reconstruction, the Lake
Gerar Bridge and the construction of 306 Rehoboth Avenue. This loan has
annual payments of $735,000 and will be retired on September 1, 2017.
• The revenue stream that has been used for this loan can be directed to
pay the City Hall loan once it has been retired. This represents more than
2/3 of the total needed.
• Approximately $360,000 in additional annual funding will be needed.
• The City has a number of revenue sources that can fund this amount
without raising real estate taxes.

10. What is needed per fiscal year?
Fiscal Year Old Loan New Loan Total
2016 $735,000 $26,250 $761,250
2017 $735,000 $210,000 $945,000
2018 $367,500 $157,500 $525,000
2019 $1,092,150 $1,092,150
2020 $1,092150 $1,092150

11. Questions?