City mulls debt refinancing

Published 8:43 pm Thursday, July 3, 2014

The city could save millions on refinancing up to $95 million in debt when it goes to the bond market at the end of this month.

City Council on Wednesday set a public hearing for July 16 to receive comment on the refinancing, as well as about $47 million in new debt for various projects.

“Obviously, we’re able to do this because of our sound financial planning that we took on from 2006 forward,” City Councilman Charles Parr said, also noting the city has been able to match grant funds from various sources. “Other localities aren’t in the financial position to do that.”

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Finance Director Lenora Reid told the City Council members that the new debt includes $2.5 million to purchase land for a new multi-school campus; $6 million for Holland Road and the Kenyon Road Connector; $825,000 for a ladder truck for the Lake Kilby fire station; $2 million for the central library feasibility study, master planning and design work; $1.75 million for a Parks and Recreation maintenance and storage facility and the Bennett’s Creek Recreation Center; $18 million for a Public Works operations center; and $16 million for various water and sewer expansions and upgrades.

Most of the money for the Public Works operations center and Holland Road will eventually be repaid by the Virginia Department of Transportation, not the city.

The savings on some of the refinanced debt could be as much as 10 percent of its net present value, Reid said, an amount Mayor Linda T. Johnson called “significant.”

“These are real cost savings for the city,” Reid said. “This refunding opportunity is because of the sound and hard decisions that you’ve made as a council that put us in a strong financial position.”

Parr said the refunding “just shows how good our bond rating really is and that we’re close to hitting that peak of the mountain so we can be AAA,” referring to the highest rating issued by the three bond rating agencies.

Reid said the existing debt will be refinanced only if the market remains favorable, and the city will not extend the debt into the future.