City gets good news on bonding

by Emmitt B. Feldner of The Review staff

PLYMOUTH – The city got all it wanted – and more – out of its latest bond issue.

Phil Cosson of Ehlers and Associates, the city’s financial advisers, reported to the City Council Tuesday on that morning’s bond sale on behalf of the city.

“I have great news for you,” Cosson told the council, reporting that the $7.615 million general obligation bond issue had sold at an interest rate of 1.9 percent.

While that news was good for the city, Cosson related that even better news was the fact that Moody’s rating service had maintained the city’s Aa3 rating for the bond issue.

That assuaged a fear expressed by Cosson and the council when the borrowing was being considered last month, that it might trigger a lowering of the city’s strong bond rating.

“The good news is this did not change the city’s ratings,” Cosson said.

The latest bonding refinanced two separate revenue bonds from 2006 and 2007, primarily for Plymouth Utilities projects but also for some tax incremental fi- nance district projects.

By issuing the latest bonds as general obligation bonds, repaid from the city’s funds rather than utilities and TIF revenues, the city pushed its borrowing total closer to state limits. Cosson had warned that it might impact negatively on the city’s bond rating.

But the general obligation bonding offered the chance for lower interest rates and reduced costs to the city, which was the case with Tuesday’s sale.

Coupled with the lack of movement in the city’s bond rating, it gave city officials all they had hoped for in the refinancing.

Indeed, Cosson related, the savings in interest payments was greater than what had been projected.

The pre-sale projection was that the city would save just over $135,000 a year in interest costs over the 10-year bond period. With the results of Tuesday’s sale, the savings will average just over $160,000 a year, according to Cosson.

Thanks to the favorable rates and the reduced need for reserve funds as part of the borrowing, the city was able to reduce the amount of the bond issue by almost $300,000 as well, Cosson added.

The council approved a $19,000 fund loan to Prime Time Cellular which had been previously approved by the Revolving Loan Fund Committee.

City Administrator Brian Yerges explained that the loan had originally been applied for last year, but the loan fund did not have enough funds available until after the first of the year.

Yerges said Prime Time is a “business within a business” located at the Radio Shack store on Walton Drive, but separate from the Radio Shack store. “They are looking to expand their options as a Cellcom provider,” he said of Prime Time.

The council passed a resolution commending former Plan Commission member Pete Rammer for his 15 years of service on the commission, which concluded in April.

Rammer, a former alderman and City Council, had been recognized with a plaque and the resolution at the last Plan Commission meeting.

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