By Kelli Jo Hull
For Hometown News
The Port Orange City Council asked city staff March 18 to move forward with a plan to refinance $18.8 million in 2004 capital improvement revenue bonds to generate savings that may be used to help finance the city's Riverwalk Park and Boardwalk project and pay down city debt.
Financial Advisor Toby Wagner, president of Southeastern Investment Securities, said, "They had a call feature, as most bond issues do, where those bonds could be redeemed prior to final maturity."
April 1 is the first call date without penalty for the bonds that mature in 2035. The city has $15.82 million outstanding on the bonds.
Refinancing at this time will provide an "opportunity to call those bonds and have what I would consider to be significant interest cost savings," Mr. Wagner said. "We haven't borrowed any new money in the past five or six years for any projects. So, this again is an opportunity to take advantage of lower interest rates and you could save approximately a little over four and a half million dollars total savings if the market sustains itself and stays at about the same level it is today."
"The savings could be used for funding other capital improvements, they could be used to pay off the bonds, or reduce the debt on an annual basis," Mr. Wagner said.
He explained to council members that should they decide to move forward with refinancing now, city staff would bring an ordinance before them for approval to do so and then follow up with a "financing plan showing different options" for the use of the funds generated from the interest savings.
Mayor Allen Green said, "It would be my recommendation that we go out and seek it and I also would like to reduce the debt."
"It makes good sense," Councilman Bob Ford said. "I'm interested in taking a moderate approach. We have several important things occurring here that this would be a nice way to finance. On the other hand, I am opposed to going out too far in the sense that I'm feeling terrible guilt about passing along my debts to my grandchildren. We really should, as much as possible, pay our own bills. I think the federal government has led us in the wrong direction. I prefer us not to follow that lead."
Vice Mayor Donald Burnette and Councilman Drew Bastian asked for caution with regard to the final use of the funds generated.
"I wouldn't want to just freely spend that money. We do have capital projects that we're going to be looking at, Riverwalk being one of them," Mr. Bastian said.
Councilman Dennis Kennedy said, "It's pretty obvious that it's the right thing to do. Mr. Mayor, I think I'd like to see us do something towards paying the debt down" as well as possibly using the funds for Riverwalk.
City Manager Gregory Kisela said, "We wanted to bring it to you as a potential funding source for Riverwalk, but it has also other potential benefits."
Mr. Kisela said city staff would do an analysis on how the funds could be best spent. "We can bring you back that additional information to make an informed decision," he said.