Bond refinancing to save city $1 million
By Jeff Gallatin
North olmsted
Published Feb. 22, 2006

An anticipated savings of about $1 million in future bond debt payments will enable the city to shift funds to other needed projects.

Last night City Council was expected to give final approval to legislation which would approve the refinancing of bond payments of various capital improvement projects approved by the city in recent years. Assuming the new deals go through, the new financial terms means the city won’t have to spend the estimated $1 million on debt service payments in future years.

Mayor Thomas O’Grady said the deal will have a large, positive impact on the city budget for years to come.

“Those savings mean we will be able to apply the money in future years which would have been used for those higher bond payments to other needed work and payments around the city,” O’Grady said. “In these tight economic times, that’s a huge benefit to any city and its general expenditures.”

During his recent campaign for the mayor’s office, O’Grady said reducing the large amount of long-term debt compiled by the city in recent years was his number one goal for his first full term as mayor.

“We can’t keep carrying that kind of long-term debt for a city and expect to see financial improvement,” O’Grady said. “When much of that debt was approved, the city fathers did what they had to do to take care of needs in the city in that time. Now it’s up to us to find ways to reduce that debt and keep the city moving forward in a positive direction. Re-doing these bonds is a fine way of doing that.”

O’Grady said Finance Director Carrie Copfer and council deserve credit for seeing the opportunity to cash in on savings for the bond payments.

“You have to take advantage of  good deals when you see them,” O’Grady said.

Copfer said the new deals also benefit the city because they don’t extend the payments out any longer than previously.

“That’s something that several members of council really didn’t want to happen and we did not do that in this deal,” she said.

Since the refinancing can only be done once, Copfer said it was crucial to get the interest rates set at an amount, which would benefit the city the most over the time period the bonds would be paid in.

“That’s also a good part of the deal, since the National City (Bank) officials talked about that with the council members and explained how it would provide the best benefit,” she said.

If for some reason the rates did not remain beneficial to the city while the deal was being completed, then it wouldn’t be done, officials said.

Council members said they were pleased with the bond refunding.

“My primary concern was whether or not the payments would be extended out over a longer term of time because I don’t see that as a benefit,” said Ron Tallon, chairman of council’s finance committee. “Since we determined that isn’t happening this should be a good deal for the city.”

Many projects familiar to city residents such as the fire station, new county library branch, street and storm sewer work are involved in the new deals. Paul Barker, whose recreation, parks and buildings committee deals with municipal buildings, said the new terms make sense.

“It’s a win-win situation for the city,” Barker said. “You’re talking about having better rates on deals for projects which were crucial to this city like the fire station and other city buildings. We have better infrastructure because the projects are already done or underway and we’ll have additional money down the road for other work.”

Paul Miller, the senior member of council, said the explanation from the National City Bank officials helped him make sure council was doing the right thing by putting the legislation in place.

“You want to see the most favorable deal possible because it’s going to have long-term ramifications for the city,” Miller said. “National City gave us an excellent explanation of the benefits to us.”