Source: Sherman Publications

Better rate on bonds for city

by Trevor Keiser

March 07, 2012

When it came to refunding city bonds, Jessie Nelson of Umbaugh and Associates said City Manager Dennis Ritter was “wise to wait until early February.”

“We had talked about doing this in early November, but he knew where interest rates where going,” Nelson said at the Feb. 27 council meeting. “The city hit the market at about the exact right time, so that was nice.”

Clarkston has three series of bonds, which were taken out in 2002 for water lines and road improvements. The three series add up to over $1 million. Interest rates currently range between 3.90-4.40, but could mature up to as high as 5.30.

Ritter said, a year ago, the best they could have saved by refunding bonds would have been $42,000 by refunding bonds. Today, they will save around $245,800, or 3.4 percent on a fixed interest rate of 2.33 percent from Chase bank.

“That killed my estimate of 3.1 percent,” Nelson said, which would have yielded a savings of $132,400 or an 8 percent savings. “That’s really fantastic. We’re pleased with those results,” he said.

Ritter agreed.

“I’m really ecstatic about it for the residents of the community because they’re just going to benefit from the savings,” he said. “It will be by means of a lower debt retirement tax, which would otherwise have to be paid.”

Nelson credited the city for having a good credit score and Chase Bank “for coming through.”

Mayor Joe Luginski said it echoes the theme they’ve recently received from the Southeast Michigan Council of Governments (SEMCOG) and the Michigan Municipal League (MML) a year ago.

“Financially this city is very sound, good credit, and we have a good fund balance. All those things and the way this city has been run, not only today, but for the last 20 years is why we can do this,” Luginski said. “It’s a credit to all those people that came before us and why we’re here. Dennis is the manager of that and why we’re in that position, without that we wouldn’t be able to get this. I think it’s a key thing.”