By Sue Botos
City Council has begun the process of restructuring debt for several road projects and for the Don Umerley Civic Center. The move is expected to add about $826,000 to city coffers over a 10-year period.
John Petty, underwriter for Huntington Bank and a former member of the city’s Parks and Recreation Commission, told council at its last legislative session that current interest rates make refinancing a favorable option at this time. City officials hope to sell new bonds of up to $5 million for those first issued in October 2004 for improvements to Aberdeen Road, Inglewood Road, Hilliard Boulevard, Orchard Park, Bates Road and Wooster Road. Also included is work on the outdoor aquatic center. Of the original $10,840,000 in bonds, $4,580,000 is still outstanding.
In addition, the city hopes to sell over $4.6 million in bonds for the civic center. In February 2005, $8,400,000 worth of bonds was issued for improvements to the center, which included an indoor pool and fitness center. Of that original amount, $4,640,000 is outstanding.
Virginia Benjamin, the city’s bond counsel, stated that it was preferable to approve a larger amount for the refinancing of the street work because this was not a bond issue passed by voters and is subject to fluctuating market prices. Voted bond issue prices remain the same.
Petty said, however, that the low interest rates will not last. “Since 2000, we have seen lower interest rates, but this will come to an end,” he said. He added that to date, he and his team have been working on an official statement, or prospectus, with the plan of refinancing in early August. “It makes sense to do this while rates are still low,” he said, adding that the federal government has indicated rates will tighten up in the fall.
Tim Reidy, director of public finance for Huntington, said that the 5 percent interest rate currently being applied to the bonds can be improved. For the 2004 bonds, restructuring can result in a total of $565,000 in savings to the city’s general fund. For the civic center, a savings of $25,000 annually for 10 years can be realized.
“Passing (the legislation) is not the green light to sell. It opens the window of opportunity,” Reidy explained.
Petty added that should the proposed income tax increase (see related story, p. 1) be approved by voters in November, there would be an opportunity to “capture the interest rate while the income tax is ramping up.”
He added that the prospectus for the bond sale is almost completed and that he and his group will meet with representatives of Moody’s Investors Service, a credit rating company providing investors with the means of determining credit worthiness. In April, Moody’s gave the city an AA2 rating, the second-highest available.
Agreeing to refinance, said Petty, does not lock the city into a contract. “This is not an obligation, this is just the authorization saying it can be done,” he stated. Petty added that if interest rates make an unexpected jump, the process can be halted.
Mayor Pam Bobst thanked Petty, Reidy and Benjamin for “getting us to this point.”