City benefits from historic low interest rates, strong credit rating in recent bond refinancing

Powell: City benefits from historic low interest rates, strong credit rating in recent bond refinancing

(POWELL, Ohio)—April 23, 2021—The city of Powell has taken advantage of low interest rates and the city’s Standard & Poor’s ‘AAA’ bond rating to refinance portions of the city’s debt, reducing the debt service by more than $8.85 million over the life of the bonds.

This bond refinancing will reduce both the interest paid on the debt and reduce the term of the debt issues. The city sold the bonds using a competitive bid process receiving seven bids with the winning bid resulting in an all-in interest cost of 1.05 percent, drastically lower than the current debt that was outstanding at over 3 percent.

The original bonds supported necessary public capital investments associated with a private development through the establishment of a Community Infrastructure Financing Authority (CIFA). The Liberty Community CIFA and Powell Community CIFA partnered with the city to finance these costs at competitive rates.

Historically low interest rates combined with the CIFA’s contribution of available cash facilitated reducing the outstanding debt service on these issues from more than $18.8 million to $9.95 million.

“The city’s excellent bond rating coupled with current market conditions provided us with an opportunity to refinance and save individuals located in the Liberty Community Infrastructure Authority and Powell Community Infrastructure Finance Authority thousands of dollars in special assessment fees,” said City Manager Andrew White. “Powell provided the developer our strong bond rating in the early 2000’s in order to finance public improvements that made the Golf Village, Murphy Park and Traditions Way subdivisions a reality.”

The Liberty Community Infrastructure Financing Authority – the authority for Golf Village – financed the extension of Sawmill Parkway from Seldom Seen Road to Home Road as well as water and sewer improvements. The total cost of the bond was approximately $22 million and was estimated to be paid off in 2036. Through refinancing, this bond will be paid off approximately 10 years earlier in 2026.

The Powell Community Infrastructure Financing Authority – the authority for Murphy Park – financed the extension of Murphy Parkway south of Olentangy Street as well as water and sewer improvements. The total cost of the bond was approximately $3 million. The debt refinanced for the Powell CIFA will now mature in 2029 versus 2036.

Both financing authorities have a seven-member board. The residents of the subdivision elect board representatives. The financing authority boards are responsible for meeting annually to set the community development charge, or millage, necessary to make the debt payment. The maximum amount is 10.25 mills per year. The Delaware County Auditor’s Office collects the community development charge along with the collection of semi-annual property taxes. The specific charge appears under “Special Assessments” on the bill or under the Tax Detail tab located on the Delaware County Auditor’s website.

“The city is proud of its strong financial operations and fiscal responsibility,” said Mayor Frank Bertone. “Refinancing these bonds for the community finance authorities is one step of a much larger initiative to continue delivering sound and transparent fiscal practices for our residents and businesses. We’re continuing to implement ways that strengthen our partnership with the community and invest in our future.”

The city anticipates closing on the bonds in early May.

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Contact:

Megan Canavan

Assistant City Manager & Communications Director

(614) 885-5380 (office)

mcanavan@cityofpowell.us (email)

@CityofPowellOH (twitter)

 

The special assessment for this property owner below will save approximately $13,000 due to the reduced term of the bond and new competitive interest rate. Residents will see varied cost savings based on the value of their homes in the CIFA area.

 

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