Thursday, December 18, 2014

Refinancing likely to save city $330K

By DOUG CARDER, Herald Senior Writer | 6/9/2014

The City of Ottawa is poised to save about $330,000 by refinancing a pair of state loans for sewer and water improvements.

Ottawa city commissioners last week voted 5-0 to approve a $7.855 million bond issue to help pay for $1.1 million in street improvements this summer in Ottawa, as well as refinance 2001 and 2008 Kansas Department of Health and Environment loans for sewer and water improvements, to take advantage of more favorable interest rates.

The City of Ottawa is poised to save about $330,000 by refinancing a pair of state loans for sewer and water improvements.

Ottawa city commissioners last week voted 5-0 to approve a $7.855 million bond issue to help pay for $1.1 million in street improvements this summer in Ottawa, as well as refinance 2001 and 2008 Kansas Department of Health and Environment loans for sewer and water improvements, to take advantage of more favorable interest rates.

The $900,000 street improvement bond issue — coupled with what already was budgeted for street repairs in 2014 — would give the city an opportunity to complete $1.1 million in street improvements this year, city officials said. About $250,000 of those improvements would be targeted for sidewalks.

The bond sale’s winning bidder, Robert W. Baird & Co., submitted the lowest interest rate of 2.2309 percent.

“We received five bids, and the interest rates were all very close,” David Arteberry, senior vice president of financial advisor George K. Baum & Company, which handled the bond sale, said. “You had to go out four decimal places to see differences in bids [submitted by Baird and the next lowest bidder].”

Arteberry told the city commission that the savings on the water and sewer loans amounted to $329,415.42, exceeding the previous estimated savings of $311,000 and bringing in the total bond issue of $7.855 million below the maximum target of $8.25 million.

“I’m pleased to report we exceeded even the most recent estimates,” Arteberry said.

The nearly $330,000 savings would be realized over the life of the bonds, Scott Bird, the city’s finance director, said.

“The lion’s share of the savings would come from the refinancing of the sewer loan, and that pays out in 2024,” Bird said. “I was very pleased with the outcome.”

Blake Jorgensen, city commissioner, pointed out the savings the city would gain from refinancing the KDHE loans would more than cover the projected $311,000 in interest costs for the street improvements bond, which runs through 2030.

City staff plan to have a bid opening for the street work June 30, Richard Nienstedt, city manager, said.

Barring unforeseen circumstances, Nienstedt said, he is hopeful the commission would be able to award the project to the winning bidder at its July 2 meeting and the work could begin as soon as possible.

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