City Approves Bond Issue for Heifer Building, Refinance

by Gwen Moritz  on Monday, Sep. 22, 2008 12:00 am  

The Murphy-Keller Education Center shown under construction earlier this year. The bond issue will raise funds to finish it.

The Little Rock City Board of Directors last week agreed to facilitate a bond issue to refinance Heifer International's downtown headquarters and to help pay for a building currently under construction.

The resolution creating a public facilities board does not obligate the city or its taxpayers to repay the bonds, which would be tax-free and therefore carry a below-market interest rate.

However, Heifer's request to issue up to $20 million in bonds over two years suggests continuing weakness in its ongoing capital campaign to pay for the Murphy-Keller Education Center, which is being built adjacent to the headquarters that opened in 2006.

"The commitment is still to pay for the Murphy-Keller Education Center with donor dollars that are specifically committed for that purpose," said Ray White, spokesman for the hunger-relief charity.

In July, CEO Jo Luck told Arkansas Business that Heifer had already received "over $10 million and then we have some that's pledged beyond that" toward the $13 million needed to pay for the $8.2 million Murphy-Keller construction and related projects, including a commons area, landscaping, sidewalks and additional parking. The contractor on the project is CDI Contractors Inc. of Little Rock.

$5.7 Million Gap

But White said a gap of $5.7 million remains between the amount raised and the $13 million total cost, suggesting that the capital donations in hand are significantly less than Luck indicated 10 weeks ago. The bond issue would be used to bridge that gap and to refinance the $7.5 million debt remaining on the headquarters.

The main building, which replaced a patchwork of leased spaces, was built with a $19.5 million construction loan and mortgage from Regions Bank, which will mature next month. White said the interest rate was about 5.5 percent, and it has been paid down well ahead of schedule.

In July, using internal documents, Arkansas Business reported that Heifer's capital campaign raised only $1.08 million in the fiscal year that ended June 30, less than half what it raised in each of the two previous years and a fraction of the $5 million that its annual budget anticipated.

At the time, Luck indicated that the Murphy-Keller project would be scaled back if fund-raising didn't improve.

"Maybe we'll have to leave off something toward the end, but we will have our education center because that is all covered," she said.

White said borrowing money to complete the education center as originally envisioned was not a huge departure from the plan that Luck had described.

"The capital campaign is ongoing and it will pay for that project," he said.

He also said lowering the interest rate on the headquarters would free up money for Heifer's hunger-fighting mission.

He also said that the Heifer headquarters, the state's first "platinum-rated" green building, has been an particularly good investment "in an era of rising energy costs." For instance, he said, the 97,000-SF building has an average monthly water bill of $300, which he compared to a suburban homeowner who waters his lawn regularly. 



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