The city of Leeds is poised to enter the fall with a more positive financial future on the horizon after being allowed to release some liability on the Bass Pro Shop's A-series warrants.
Initially issued in 2006, the $24.3 million in A-series warrants were issued as general obligation warrants, holding the city of Leeds liable if Bass Pro Shop were to default.
However, when Regions Bank, the guarantor of the bonds, had their letter of credit revoked, the cities of Leeds and Moody, as well as St. Clair County were charged with the task of restructuring the debt.
The new arrangement allows the city of Leeds to drop down to a limited obligation bond, pledging specific tax revenues from the Bass Pro Shop operation, but holding them harmless for the $24.3 million payment in the event of a Bass Pro default.
“This allows the city to refinance other debt,” said Paul Woodall, an attorney representing the city of Leeds in the matter. “With that $24 million obligation that could be called at any time, it would be almost impossible to refinance other debt, and the series C bonds will be coming up in the next few months. So, it would impede your ability to finance or refinance other debt with reasonable terms.”
Essentially, he said, it untangled the city's credit from the Bass Pro Shop's credit.
“If anything happened to them, it wouldn't take the city down too,” Woodall said.
In exchange for releasing Leeds' liability on the loan, Regions Bank required that the mortgage for the Bass Pro Shop be amended to spell out Regions’ ability to foreclose the nature park that adjoins the Bass Pro Shop commercial building, should the store default on the loan.
Woodall explained that the Bass Pro Shop gave Regions Bank very broad rights, and while the foreclosure right was assumed, it will now be specifically stated.
Securing the Bass Pro debt is a letter of credit issued by JP Morgan Chase to back the Regions Bank letter of credit, which was enough security to let the city of Leeds off the hook for the debt.
A validation proceeding is scheduled for Aug. 30 in Jefferson County Circuit Court, and after a 14-day appeal period, the documents will be signed and the warrants re-marketed.
The agreement was understood to be dependent upon the consent of all three governmental entities involved with the process. However, Leeds and Moody both unanimously approved the agreement Monday evening, and the St. Clair County Commission followed suit during their regular Tuesday meeting.
When asked for their reaction after the motion passed, Councilwoman Charlotte Earnest simply said, “Hallelujah.”
“It's a relief. It feels like someone lifted a huge block off of our shoulders,” Councilwoman Susan Carswell added.