Council agrees to refinance Series 2012 Bond

Thursday, May 14, 2020

By Samantha Jones

Citizen.Editor.Eureka@gmail.com

The Eureka Springs City Council voted Monday night to refinance its Series 2012 Bond.

The council heard from Michael Moyers, a representative of Friday, Eldridge and Clark, who said the council needed to approve an ordinance authorizing the issuance of a sales and use tax refunding the bond for the purpose of refinancing the cost of capital improvements. Moyers said the 1 percent tax that secures the bond was levied in 1990.

“It’s the same tax that secured bonds going back quite a ways, at least until 2005 and maybe back further than that,” Moyers said. “The point of this is to save money. I believe savings are being made available to you.”

The bonds won’t be extended at all, Moyers said, and will reach maturity on Oct. 1, 2027 as previously planned. The one thing that sets this refinancing apart, Moyers said, is that the council doesn’t need a debt service reserve to make it happen.

“The purchaser of this one … has not required a debt service reserve,” Moyers said. “That just means you do not need to use proceeds of the bonds to fund a rainy day debt service fund.”

Moyers said the ordinance allows Mayor Butch Berry to immediately accept the offer to refinance the bond and sign a letter with a rate that was only offered through May 11. That’s why the council also needed to approve the emergency clause, Moyers said.

“The emergency clause is to give the mayor immediate authority to sign the letter to lock the savings in for the city,” Moyers said. “By accepting the letter of offering … the mayor is locking in the interest rate of the bonds. Otherwise, you’re going to be subjected to interest rate risk until the next council meeting.”

The council approved the ordinance on a first reading and then on second and third readings by title only. The council also voted to approve the emergency clause.

At the end of the meeting, Berry remarked that a lot of people were in town over the weekend. He advised citizens to stay safe.

“Wear your masks, please,” Berry said. “Practice social distancing. Wash your hands and be aware of what you are doing.”

The council’s next regular meeting is scheduled for 6 p.m. Monday, May 25.

Comments
View 1 comment
Note: The nature of the Internet makes it impractical for our staff to review every comment. Please note that those who post comments on this website may do so using a screen name, which may or may not reflect a website user's actual name. Readers should be careful not to assign comments to real people who may have names similar to screen names. Refrain from obscenity in your comments, and to keep discussions civil, don't say anything in a way your grandmother would be ashamed to read.
  • I watched both the budget and city council meetings, but the budget meeting was far more interesting. I don't relish being right in my projections for the city, but I think the council is exhibiting sound leadership to be requesting serious cuts to stem the big fiscal hurt heading our way. It does look, however, like not all city departments are taking the tax revenue crisis seriously. I suppose it's difficult to go through this process of cuts when you've never had to do it before. Luckily, it's not really going to be a problem though. If cuts aren't significant enough, a bankruptcy judge will be happy to do it for them. The bad news is he or she won't be worrying about preserving pension contracts, benefit packages or defective vendor contracts and they won't be influenced by any city relationships. In bankruptcy, those things will all be restructured. Rest assured, he or she will make unbiased cuts and do it with a sword not a scalpel. Just across the board with terse instructions to "make it work" even with potentially less than half the tax base ultimately remaining.

    I am still expecting a couple of our reps who have little work experience to call for increased taxes on an already financially depleted population. It's always so much less stressful to live in the world of ignorance than reality but eventually reality does come a calling. Remember, just because you don't see the person pay for it, doesn't mean it's free.

    -- Posted by Theuncommonsense on Fri, May 15, 2020, at 10:52 AM
Respond to this story

Posting a comment requires free registration: