Council to consider refinancing City Hall bonds
By Steve Dreyer
The Poway City Council will be asked Tuesday night to proceed with the refinancing of bonds issued in 2003 to build the city office building and council chambers.
Doing so will likely save the city about $200,000 per year until the bonds are paid off in 2033, according to a report prepared by Assistant City Manager Tina White. Total savings are estimated at $4 million.
The new City Hall and council chambers were financed by the issuance of $17.7 million in “certificates of participation (COPs).” They were sold at interest rates ranging between 3 and 5 percent according to the report. Voter approval was not necessary.
The COPs were structured to allow their refinancing (also called “refunding”) this year, White wrote. In current bond marketing conditions, the city may be able to sell the bonds at 3 percent interest, providing the savings to the general fund and water and sewer funds, from where the 2003 bond payments are coming.
COPs should not be confused with long-term capital appreciation bonds (CABs,) the now-controversial mechanism used last year by the Poway Unified School District to finance the completion of school upgrades.
White wrote the city will be allowed to refund the City Hall bonds again in 10 years, if market conditions warrant. The bonds will be paid off by their original date of 2033, she said.
Contributing to the estimated $200,000 annual savings is the fact the city will be lowering the reserve debt service fund for the bonds from an amount equal to one year’s debt service to one equal to six months, White wrote. Several reasons for doing so were listed, including saving $600,000 in borrowing costs and the fact that the city’s Standard and Poor’s rating criteria permits it.
The council will meet at 7 p.m. in the council chambers at 13325 Civic Center Drive.
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