Lower bond rate will smooth streets
Published 12:00 am Wednesday, November 2, 2011
The Andalusia City Council’s go-ahead on refinancing $8.75 million in long-term debt may sound like boring paperwork to some, but it will mean smoother streets in the city come spring.
The refinancing package will free up $400,000 for paving projects expected to be completed next spring, Mayor Earl Johnson said.
Johnson explained that the bond issue includes refinancing of existing debts, including:
• The city’s 2002 bond issue, currently financed at 4.5 percent. This bond issue financed, among other projects, the renovation of city hall. The amortization schedule with the new bond issue keeps the payoff date for these bonds.
It also includes refinancing several projects currently financed with local bank notes at varying rates. Refinancing these in the bond issue saves a substantial amount in interest costs, officials said. They include:
• Snead-Kennedy property, financed with a local bank since purchased in the 1990s.
• the Barrow’s property, also purchased in the 1990s.
• Springdale, purchased by the city in 2010.
• The Bass Building, purchased by the city in 2010.
• Cemetery improvements, including fencing, landscaping, draining and irrigation projects. Proceeds of lot sales are earmarked for these costs.
A second series of industrial bonds approved Tuesday finances the addition the city built to the new SaeHaeSung building. Lease payments from SaeHaeSung services the debt.
“This consolidates all non-bond financing, except for one bank note for vehicles,” city clerk John Thompson said.
The bonds are expected to be sold within the next month, he said.
“We have our bond rating, and are waiting on a proposal for bond insurance,” Thompson said. “We also are watching the bond markets and want to do this at the most favorable time.”
The city expects to have a $400,000 cash windfall from the proceeds of the bond sale, which will be earmarked for paving projects.
Johnson said, “The real story is that this puts some structure in the bank notes we had out there, some that go back several generations.”
On some of the notes, he said, the city was only making interest payments.