The East Bethel City Council voted 4-1 Nov. 20 to pursue issuing $5,525,000 in general obligation bonds to refund $6,100,000 in Series 2010B Build America Bonds for an anticipated savings in interest expenses of $1,305,000 over the next 26 years.
The city is applying $670,000 in unspent bond proceeds to reduce the size of the bonds.
Councilmember Heidi Moegerle voted against the motion, having said earlier in the meeting that she would have liked more information and to see additional options before moving forward with committing those future tax dollars.
Moegerle also expressed concern about some wording in the pre-sale report on the bond issuance compiled by the city’s financial advisors, Ehlers & Associates, Inc., such as a section stating that the city “expects to pay the majority of the debt service with utility funds.”
“That’s just not true,” said Moegerle. “The whole point of refinancing is that we don’t have enough [sewer and water] customers now or in the foreseeable future to pay this debt with utility funds.”
City Attorney Mark Vierling said he did not think the wording would pose a problem.
“Whether you agree with the statement or not, that [utility funds as the source of payment] was the original authority under which the original bonds were sold,” he said.
Stacie Kvilvang of Ehlers & Associates said the document in question is just a pre-sale report and not a securities document.
The city has been exploring opportunities to refund its 2010 A and B water and sewer bonds for several months.
Ehlers & Associates will solicit competitive bids for purchase of the bonds from local banks as well as regional underwriters in order to obtain the lowest interest cost to the city.
The estimated closing date on the bonds is Jan. 9, 2014.