Council shelves $11.8M bond refinancing

A bill that would have allowed the city to effectively refinance $11.8 million in bonds and save an estimated $200,000 per year through 2021 was pulled at the Nov. 29 Springfield City Council meeting due to rising interest rates.

“Supply has overwhelmed demand,” City Manager Greg Burris told council. “Our savings are now lower than expected.”

The bill was scheduled for a second reading and a vote, but it was tabled until the first of the year, said Springfield Finance Director Mary Mannix Decker. The bonds, which were used in 1998 and 2000 to acquire land for Jordan Valley Park, would have been sold and refunded in December.

Decker said a flooded bond market began to emerge just prior to Thanksgiving, and the expectation was that rates were going to be higher than previously thought once the bonds would go up for sale.

“California had sold $10 billion in Revenue Anticipation Notes the week of the 15th, which effectively raised interest rates a half-percent,” Decker said.

She said Build America Bonds, which are owned by many municipalities across the country, also were flooding the market. The interest rates on those bonds are subsidized by federal stimulus dollars, and Decker said many communities are trying to sell their bonds before those subsidies stop at the end of the year.

Burris said the plan that Decker has compared to refinancing a mortgage had merit and would be reconsidered once the municipal bond market stabilizes.

Decker said rates were projected to be just above 3 percent when the ordinances were introduced at the Nov. 15 meeting. She said she couldn’t quantify how much the rates would have missed their projection because they were never sold.

Decker said no money was lost by holding back the measure, and its current terms have stayed intact because council never approved the plan. The city currently pays 5.7 percent interest on the bonds, and issues $2 million a year in bond payments. Had the bonds been reissued at the projected rate, the city would have saved $200,000 a year through 2021, according to Decker.

She said she believed the bill would need to be reintroduced for two readings when the city decides to move forward. The Finance Department periodically reviews the city’s long-term debt for opportunities to save money.

2011 candidates certified
Candidates for Springfield City Council seats to open in 2011 have been nailed down, in preparation for the April 5 general election.

A primary election will be held Feb. 8 for General Seat C and Zone 3 to narrow down the list of candidates to two.

Mayor Jim O’Neal will be running unopposed for a second term. Springfield mayors can serve up to four consecutive two-year terms.

General Seat C candidates are:
• Arthur Hodge Sr., a retired Springfield Public Schools employee with more than 20 years of military experience;
• Christopher Donegan, who finished behind O’Neal in the 2009 mayoral race; and
• incumbent Doug Burlison.

General Seat D candidates are:
• Thomas Bieker of Midwest Environmental Consultants; and
• Fred Ellison, who ran for General Seat B in 2009 but lost to John Rush.

In Zone 2, Jan Fisk, J. Howard Fisk Limousines co-founder and chief financial officer, is running against incumbent Cindy Rushefsky.

Zone 3 candidates are Jerry Compton, Reggie Duke II, and Stephen Keith Pennington. Springfield City Clerk Brenda Cirtin said Duke and Pennington did not submit biographical information.[[In-content Ad]]