Columbiana hopes to refinance sewer bonds
COLUMBIANA – The city is looking into an opportunity to save money on the sewer assessment bonds it took out in 2005 for some properties along state Routes 7 and 14.
Mike Burns, director of Robert W. Baird and Co. of Milwaukee, Wis., said he could get the city down to a roughly 2.6 percent interest rate on the bonds that mature in December of 2025.
Finance Director Mike Harold said the city is currently paying around four percent on the bonds and thinks refinancing is a good idea.
The city pays roughly $400,000 a year on the bonds and still owes $3.6 million.
Burns said the refinancing would save the city just over $200,000 for the duration of the bond term. His fee would amount to about $30,000, and will only be paid once the bond is closed.
“That $200,000 savings compared to the $30,000 cost is not that bad,” Harold said. “If we do nothing we are just going to keep paying on those bonds for the next 12 years at 4.5 percent interest.”
Harold explained the interest fluctuates between four and 4.5 percent each year.
In the early 2000s, the city had extended water and sewer service to the property originally owned by Meadowbrook Development LLC, which had intended to construct housing developments there, but the company defaulted on the loan, leaving the city responsible for the special assessments owed.
The city used money from the sewer fund to cover what was left behind by the company and in 2012 was able to pay back $1.25 million to the fund after the property was purchased by Firestone Homestead LLC at sheriff’s sale.
The money covered what the city spent the last few years to pay for the delinquent taxes, but there are still assessments owed, Harold said.
Burns also suggested the city create a bond retirement account that would be used first, should any other property owners not pay their assessments in the coming years, that way money in the general fund would not be touched.
The retirement account would be created with money saved through the new interest rate over the first couple of years.
Council members were in favor of moving forward with drafting legislation to refinance the bonds.
The matter will also be looked over by the city’s legal bond counsel.
In other business, council also heard from John Courtney, of Courtney and Associates, who attended the meeting to answer questions about the new electric rate structure.
Council members had no new questions, although resident Gaye Wagner continued to express her concern about the cost of the utility.
Wagner lives in an all electric home, and her electric bill alone tops $500 a month, she said.
She said all the new rate structure does is move rates around and is not changing anything for the user.
Councilwoman Mary Harold Calinger said the point of the new structure was to make sure the city is charging enough and was not for the purpose of lowering rates, although that would have been done if the study found the city was charging too much.
Wagner again pleaded the city look into some sort of cost adjustment for low income users during the winter months, but council said that isn’t feasible.
She said she makes too much to meet the requirements for any assistant programs available in the county.
“If we lowered your bill ma’am we’d have to raise somebody else’s to pay for it,” Councilman Lowell Schloneger said.
Courtney said his company does not design rates for low income people.
The new rates structure is based on consumption and will result in a slight increase to customers over the years due to the cost of power and overhead.