Council approves new, refinanced debt

Published 9:55 pm Thursday, July 17, 2014

City taxpayers will be $47 million deeper in debt when the city sells bonds around the end of this month.

City Council approved the move in its Wednesday meeting. One person spoke against the plan.

The new debt includes $13 million for the general fund and schools, $18 million for a new Public Works operations and maintenance facility, and $16 million for water and sewer projects.

Newsletter

Email newsletter signup

In addition, the city will look to refinance up to $95.3 million in existing debt. The actual amount refinanced will depend on market interest rates on the day of the sale but will likely be about half the total amount, said David Rose, the city’s financial adviser with Davenport and Company. The refinancing could save up to $6 million over the life of the debt, he added, though he said it would be “very difficult for us to put a number” on the actual savings until the debt is refinanced.

The new and refinanced debt likely will be issued together to take advantage of economies of scale, Rose said.

Janet Gurwell spoke against the plan.

“The way to have a great city is not to borrow just because money’s cheap,” Gurwell said. “Money won’t always be cheap. We are building in grandiose fashion.”

Mayor Linda T. Johnson responded to the comments after the public hearing.

“I agree we need to be prudent,” she said.

She also expressed optimism about upcoming credit ratings from the three bond rating agencies — Moody’s, Fitch and Standard and Poor’s.

City officials met with the agencies recently in New York.

“The comments are going to be good,” Johnson said. “The comments we got were very positive, especially from Moody’s, which is the toughest agency of all.”

The new credit ratings are expected out next week.