Council moves to reissue $11.8M in Jordan Valley bonds

A pair of special ordinances unanimously approved at Springfield City Council's Nov. 15 meeting would effectively refinance $11.8 million in bonds and could save the city $200,000 a year through 2021, said Finance Director Mary Mannix Decker.

Decker recommended city leaders refund bonds from 1998 and 2000, which were used to acquire land for Jordan Valley Park.

“Our policy is to take advantage of lower rates, and this is a time of historically low rates,” she said. “It’s very similar to refinancing a house. Home rates are low right now and so are bond rates.”

Decker said payoff on the proposed bonds would still be planned for 2021, which means the current terms would not be extended. The city is currently paying 5.7 percent interest on the bonds, and if council moves to recall them, the anticipated new interest rate would be just above 3 percent.

She said the Finance Department will periodically review the city’s long-term debt to see if there are opportunities to save money. She said the current proposal is similar to a spring re-issue that resulted in lower-than-expected rates.  

Decker said exact rates will not be known until the bonds are actually issued, which would happen after Dec. 1 if council approves the proposal at the Nov. 29 meeting. She said the city will have an opportunity to back out of the proposal should interest rates skyrocket before the bonds could be sold.

The money saved from the move to a lower rate would go into the city’s General Fund, which Decker said has been subsidizing lower-than-expected revenues from the hotel/motel tax. In fiscal 2010, the tax generated just shy of $1.6 million for the Jordan Valley debt.

One of the two scheduled 2010 bond payments has already been made, which means the expected savings for this year resulting from a re-issue would be $100,000.

Read more about the Nov. 15 City Council meeting in Springfield Business Journal’s Nov. 22 print edition.[[In-content Ad]]