A push to refinance $11.8 million in bonds used to purchase and build Jordan Valley Park was tabled at the Nov. 29 Springfield City Council meeting due to a volatile market and low demand for municipal bonds, according to Finance Director Mary Mannix Decker.
The bill was scheduled for a second reading and a vote, but it was pulled to be reconsidered sometime after the first of the year, Decker said.
She 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 be put 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 bond market. The interest rates on those bonds are subsidized by federal stimulus dollars, and Decker said many communities are now trying to sell their bonds before those subsidies stop at the end of the year.
Decker said rates were projected to be just above 3 percent when the bill received its first reading 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.
She said the city didn’t lose any money by tabling the measure, and its current terms have stayed intact because the bonds were never sold. The city currently is paying 5.7 percent interest on the bonds. Decker said she hopes to revisit the issue in the first part of 2011.
“We’re going to have to wait and see what happens; nothing will be brought to council before the end of the calendar year though,” Decker said.
Council had unanimously approved the pair of special ordinances related to the 1998 and 2000 bonds Nov. 15. She said she believed the bill would need to be reintroduced for two readings if and when the city decides to move forward.
Decker said the city had expected to save $200,000 in annual payments had the bonds been sold at the originally projected rate. Payments on those bonds run through 2021.
For more on the Nov. 29 Springfield City Council meeting, look to the Dec. 6 Springfield Business Journal print edition.
Adrianna Norris became a first-time business owner with the opening of Finley River Chiropractic; PaPPo’s Pizzeria & Pub launched its newest location; and Huey Magoo’s opened its second store in the Ozarks.