Council to pursue bond refinancing
The Cassville City Council voted Monday night to look into the possibility of taking advantage of lower interest rates and refinance a bond originally issued in 2010. If successful, this move could potentially save the city $22,000 to $26,000 a year for the next seven years.
"This is a chance to reduce our interest rate on this note and maybe save some money and increase our cash flow," said Cassville Mayor Bill Shiveley
Steve Goehl, representing the firm of D.A. Davidson and Co. addressed the council and explained the steps that were taken by his firm to make this recommendation.
"When we're looking at a refinancing, we look at it from a present value standpoint. 'Present value' means that a dollar today is worth more than a dollar in the future," said Goehl. "We take these future savings and discount it back to get it into today's dollars to see if it makes sense."
A savings of 2 to 2.5 percent in present value dollars is the amount recommended to consider refinancing according to Goehl, who also noted that current rates would yield a return of 2.8 percent making this bond a candidate for moving forward.
Alderman Terry Heinz asked several specific questions about the potential savings and the proposed timeframe. He also inquired as to what the possible downside would be to the city.
"The downside is that interest rates move down," said Goehl. "If you decide to do this and four or five months from now interest rates fall even more, then you could have realized additional savings."
Goehl also suggested that the council word the motion to further protect the city and ensure that an appropriate level of savings be realized. Alderman Hennigan moved that the city proceed with this proposal and that a minimum savings of 2.5 percent must be realized to continue with refinancing.
The council approved the motion and Goehl's firm will develop the necessary documentation for consideration at the January meeting. Mayor Shiveley was in full support of the outcome.
"There really isn't any downside," said Shiveley. "If the rates don't meet whatever we said in our motion, then we don't proceed with it."
The council took action on several other items. The FY 2014 operating budget was approved unanimously. This document was presented with no anticipated increases in revenue or expenditures when compared to the current year's budget. Alderman Ledenham took a moment to express his concerns about using Economic Development excess balances to fund other areas.
"Someday we're going to have a project come up and we're not going to have [this money]," said Ledenham. "We keep chipping away a little bit at a time."
In other action, the council voted to:
|*||Pass ordinances that further clarify language for loitering and vandalism to provide the police department with clearer guidelines in enforcement.|
|*||Pass a resolution to create a part-time clerical position for the police department.|
|*||Pass an ordinance to add a 3/8 cent transportation sales tax increase as a referendum to the April, 2014, municipal election. Alderman Hennigan was the only council member who voted against the motion.|
|*||Pass an ordinance to change the amount charged to fireworks vendors from $50 to $100.|