Canton to pursue approximately $6 million loan to renovate downtown fire station; council authorizes next steps

The Canton City Council on Sept. 18 authorized city staff and its advisers to move forward with a financing plan for renovating the downtown fire station, approving a resolution that clears the way to solicit bank proposals for an intergovernmental revenue loan.

Doug Gephardt, financial adviser with Davenport and Company, told the council the downtown project’s total cost is about $8,000,000 and that $2,200,000 in fire impact fees currently held by Cherokee County are already designated toward the project. “We're looking to finance a new fire station downtown at an approximate cost of $8,000,000,” Gephardt said during a presentation to the council, adding that the city expects to borrow roughly $5,800,000 after applying the impact-fee balance.

The financing plan recommended using the Canton Building Authority as the issuer because the Downtown Development Authority (DDA) cannot directly issue government debt for the project. Gephardt said the DDA will transfer title of the property to the building authority, and the county will need to consent to amendments to its contracts with the city so the bond proceeds can be spent on construction. “Because the building authority is going to be the issuer of the bonds, the DDA will need to transfer the title of the property from the name of the DDA into the name of the building authority,” Gephardt said.

The proposal the council approved tonight authorizes staff, Davenport and Company and bond counsel to distribute an RFP and solicit direct bank loan proposals rather than a public offering. Gephardt said the city plans for a 20-year loan with three years of interest-only payments as a conservative assumption, using a 5% planning interest rate to estimate debt service. He told the council that closing is anticipated Nov. 18, with first payments expected in fiscal year 2027. “We're looking at a 20-year debt with three years of interest only…first payment being in October 2026 or really in fiscal year 2027,” Gephardt said.

City staff emphasized that while impact fees are the anticipated source of repayment, the city’s full faith and credit would be pledged in the intergovernmental contract so the general fund could cover any shortfall. City staff member Ingram said work remains to finalize an agreement with Cherokee County so that future fire impact fees are dedicated to the project. “We want to make sure that all future impact fees will be dedicated to the project,” Ingram said; staff said discussions with the county were ongoing.

Councilmember Johnson asked about the $8 million estimate and who would cover any cost overruns. Gephardt and staff said the $8 million figure is a conservative high-end estimate based on a 90% cost estimate; the financing plan and intergovernmental agreements will address repayment if costs exceed estimates.

The council voted to authorize the resolution permitting staff to proceed with the RFP and related financing steps. The action clears the way for the DDA and building authority to adopt necessary resolutions in October and move toward closing in November if terms are agreed.

The council’s authorization does not itself obligate the city to borrow; it approves the steps needed to solicit and evaluate bank proposals and to prepare final documents for later approval.

What happens next: staff will distribute the bank RFP, evaluate bids and return to council with a financing recommendation. The DDA is scheduled to act in October to transfer property title to the building authority as required for the structure Gephardt described.