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Alamogordo delays vote on $12 million natatorium loan amid cost and contingency concerns
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Summary
The commission postponed final adoption of Ordinance 17‑22 authorizing a $12 million loan for a municipal natatorium, asking staff for more detail after bond counsel cited preliminary 25‑year net interest costs in the mid‑4% range and commissioners questioned contingency and scope.
The Alamogordo City Commission on March 24 postponed a scheduled final vote on Ordinance 17‑22, which would authorize delivery of a loan and intercept agreement providing $12 million for construction and equipping of a municipal natatorium. The item was deferred to the commission’s April 14 meeting by unanimous vote.
City bond counsel Chris Muirhead briefed the commission that the New Mexico Finance Authority, as lender, is expected to deliver loan terms after selling bonds; preliminary runs showed a net interest cost ‘‘about 4.35%’’ for a 25‑year bond that is callable at year 10. Muirhead said the Finance Authority would borrow at its rate and loan proceeds would be passed to the city; closing was projected for May 1 if markets and the financing schedule proceed.
Commissioners raised concerns about the project budget and contingency. City staff reported design and preliminary costs of roughly $1.65 million already spent on design and tie‑ins; the financing plan pairs $12 million in borrowing with roughly $4 million previously set aside, leaving an intended contingency of about $2.3 million. Commissioner concerns focused on whether the completed plans and the engineers’ probable cost (EOPC) would actually fit the $12 million construction target without extensive value engineering.
"If it does not come in at $12,000,000, they are going to have to go in and modify the design to where the EOPC gets to $12,000,000," the city manager said, noting the commission retains final approval of bids and construction contracts. Counsel and staff repeatedly noted that if bids exceed the planned budget the project team would need to redesign or return to the commission for further instruction.
The commission moved, seconded, and passed a motion to defer final adoption and publication of the ordinance to allow additional review and to permit the mayor, city manager or finance director to accept loan terms if those terms are consistent with the delegated authority established at the forthcoming meeting.
Next steps: staff will continue design work toward 90% plans, refine the final EOPC, and the finance authority will finalize pricing after its bond sale. The commission will revisit the ordinance on April 14 with the updated numbers and any final loan terms that staff can accept under the delegated authority.
Votes and motions: the motion to defer adoption passed 6–0; the ordinance requires a supermajority of commissioners for adoption when the item involves municipal debt (see city code/procedure).
