MERIDIAN — City of Meridian Law Enforcement Center
Watkins Development and Citizens National Bank are working closely together on the Meridian Law Enforcement Center project, or the MLEC Project, that will result in the City of Meridian occupying a new state of the art law enforcement center.
The City of Meridian has negotiated a favorable buy down of the annual lease payments to Watkins Development by agreeing to invest approximately $2 million of drug enforcement funds into the MLEC Project which it will receive back at the end of the lease in the form of the law enforcement center.
The negotiated agreement also includes zero construction or financial costs for the City of Meridian prior to moving into the MLEC. All of the financial cost and risk of building the MLEC is on Watkins Development.
The value of the lease when converted back into today’s dollars along with at least $3 million in new market tax credits injected by Citizens National Bank and one other nationally known financial institution will result in a very favorable financial transaction for the City of Meridian. Watkins Development will receive no developer fees or profit from the MLEC project.
Once construction on the MLEC Project is completed by Watkins Development, the City of Meridian will lease it from them with an option to own it at the end of the lease term. Citizens National Bank is the construction lender for the project and is also investing approximately $1 million to the project in the form of State of Mississippi new market tax credits. A nationally known financial institution is purchasing approximately $2 million in federal new market tax credits that will also help fund the project.
The MLEC Project has not met its original construction schedule due to complications with its original contractor. However, Watkins Development is in the process of negotiating a new construction contract with a reputable bonded contractor to be named in the near future to successfully complete the project.
The MLEC Project has also fallen behind schedule due to the complexity of planning and designing the legal and accounting structure necessary to facilitate the funding of approximately $3 million in new market tax credit funds into the project by Citizens National Bank and a nationally known financial institution.
The responsibility to complete the project and deliver the state of the art law enforcement center lies with Watkins Development and not with the City of Meridian. We should keep in mind, however, that it is more important to complete the project right than on time, given the favorable lease terms to the City of Meridian in view of the total project cost.
In other words, it’s worth the wait to derive approximately $3 million in new market tax credit funds from sources other than the City of Meridian and its residents. The new market tax credit allocation to the MLEC Project and other similar projects is made possible by the federal government in an effort to encourage investment in certain geographical areas of the country where investment funds otherwise might not occur by themselves.
The City of Meridian will also benefit due to the real estate taxes that Watkins Development will pay over the lease term to it, the operating expenses that will be borne by Watkins Development and the capital repairs and replacement cost that will also be borne by Watkins Development.
In conclusion, there would be a significant higher cost and financial risk to the City of Meridian to design, build, and maintain the law enforcement center over the next twenty years on its own as opposed to finishing the current project. As the deal stands, the City has no financial cost until it receives the keys to the MLEC.
This deal is extremely favorable for the City. This is primarily due to the new market tax credit allocation provided by the federal government and made possible by Watkins Development, Citizens National Bank, and your city government working together to make this possible.