The city of Anniston might have to assume almost $1 million in loan debt if it buys Watermark Tower for use as a new City Hall.
The Anniston City Council in 2010 approved a $4.9 million federally backed loan for Watermark Tower LLC, which owns the building. The company used the money for renovation work. City officials and the building's manager say Anniston will not be liable for any default of the loan. However, both also say the city could assume the remaining debt should it buy the building as a replacement for the current City Hall.
City leaders on Monday expressed interest in buying the 11-story, historic Noble Street building. City Manager Brian Johnson has said that by moving to Watermark, Anniston could vacate a deteriorating City Hall and help a historic structure. Keeping Watermark in use could also help in the city's overall downtown revitalization efforts, Johnson said. Portions of Watermark are currently occupied by the Anniston Water Works and Sewer Board and a few law firms, but the majority of it is still vacant and not renovated.
“Do we want a downtown where the Watermark sits vacant for a number of years then gets demolished,” Johnson asked. “Is that what the city wants?”
Johnson said Watermark Tower LLC, has less than $1 million in outstanding debt on the building from the 2010 loan.
"We're not necessarily looking to take on the debt, but if we have the debt, it could be rolled into a bond to buy the building and pay for the renovations," Johnson said. "Or the city could get into a situation where it could use annual rent from the water works and sewer board to pay off the debt."
James Lloyd of Noble Street LLC, which manages Watermark Tower, also said the city could assume the remaining debt should it buy the building.
"It would be accepted by someone," Lloyd said. "The owner hasn't paid off the debt yet but is getting close ... it was a seven-year term loan."
Any debt would be added onto the $4.5 million to $5.5 million the city estimates it would need to spend to renovate the building’s eight vacant floors. Johnson noted, however, that the city would likely pay less than $4.5 million for the renovations, at least in the short term.
"I can jump floors, hold off on renovating some for a while, and reduce that $4.5 million significantly," Johnson said.
Still, though the city might acquire debt if it buys the building, it won't if Watermark’s owners default on the loan.
The $4.9 million loan to renovate part of Watermark in 2010 was made under the American Recovery and Reinvestment Act of 2009, often referred to as the federal stimulus. The Calhoun County Commission had access to the stimulus-authorized loans at the time for revitalization purposes, including restoring historic sites to help with economic development. For Watermark Tower LLC to obtain the money, the city was required to sign off on the deal.
"With the federal mandate, it had to be approved by a municipality," Lloyd said.
Lloyd said Anniston will not be on the hook for the loan if the owner defaults because no money actually came through the city.
"Watermark Tower LLC went to Compass Bank and the bank made the loan and then the interest rates were lowered through the stimulus," Lloyd said.
Johnson also said the city had no ties to the loan.
"There's nothing on the city on that building," Johnson said. "There is no debt obligation."