The Fort Walton Beach City Council on Tuesday approved a $7.5 million bank loan to expand the Preston Hood Athletic Complex, two weeks after postponing the decision over concerns about how the city would pay for it.

• The project became financially viable when the Tourist Development Council on Tuesday morning approved $400,000 in annual funding toward the loan payments, Finance Director Nicole Nabors told the council.

“With the TDC meeting this morning having an approval, I feel a lot more comfortable with it,” Nabors said.

Combined with $300,000 annually that became available after the city paid off an irrigation loan early in 2025, the city can cover the estimated $710,000 in annual debt service on the 15-year loan, Nabors explained.

• The council voted unanimously to authorize staff to execute the bank loan option and to award the construction contract to Gum Creek Farms Inc. of DeFuniak Springs for $7,059,312.75.

Nabors said staff rounded the loan amount to $7.5 million to cover potential change orders, furniture and supplies once construction is complete.

The finance director said staff worked with PFM Financial Advisors to analyze multiple financing options. A bank loan emerged as the best choice because it provides favorable interest rates and financing conditions while requiring a shorter timeline and lower costs to issue compared to a public bond offering, she said.

“It provides the best combination of interest rates and financing conditions and has a shorter issuance timeframe and lower cost of issuance,” Nabors said.

Staff recommended the 15-year term over a 20-year option because it will save the city more than $1 million in interest payments despite the higher annual payment, according to financing documents from PFM.

Under an agreement, the Tourist Development Council will provide four-sevenths of the annual loan payment or $400,000, whichever is less. The agreement stipulates that if TDC funding stops for any reason, the debt service would fall back on the city’s general fund, and future councils must continue using the facility for tourism tournaments, Nabors said.

Councilman Bryce Jeter thanked city staff for their work securing the TDC funding, noting the early morning meeting in Crestview required significant effort.

• “Thank you for going to the TDC meeting this morning all the way in Crestview at 8:30,” Jeter said. “There’s a lot of people working hard behind the scenes to receive this funding.”

The 12-acre expansion

The 12-acre expansion site at 203 Hollywood Boulevard once served as the city’s field office complex. Public Works Director Daniel Payne said the project will include a 2,000-square-foot recreation operations building to replace an existing structure that is not suitable for current operations, along with a restroom building, multi-purpose turf fields, pickleball courts and more than 200 parking spaces.

The additional parking will address deficiencies at the existing complex on Jet Drive and consolidate parking to the front of the facility on Hollywood Boulevard and Martisa Road, Payne said.

The city has other financial obligations, including a $3 million balloon payment due in July 2028 on the original Preston Hood Recreation Center. Nabors said the city has restricted $850,000 for that payment and staff is working to set aside additional funds during the 2025 fiscal year-end process.

The council also authorized City Manager Jason Davis to approve project change orders up to 10 percent of the bid amount. Payne said this is standard procedure for a project of this size and helps streamline construction by avoiding delays when cost-saving changes need approval.

• “It helps streamline some of the things for me and Jason, because it’s not always above, it’s below,” Payne said, explaining that even cost reductions previously required council approval if they exceeded purchasing policy thresholds.

Councilman David Schmidt said the project will benefit both residents and tourists.

“It’s really a team effort,” Schmidt said. “It’s a benefit to the local residents and it’s also going to be a benefit to our tourists.”

The city has been working on the expansion since April 2021, when the council rejected proposals to sell or lease the property and directed staff to develop it as a recreation facility. The council awarded a bid in September 2024, but that decision was protested and all bids were rejected in October 2024. The city received eight bids when it reissued the invitation to bid in June 2025, with Gum Creek Farms submitting the lowest responsive bid.