Dec. 22, 2010
ANALYSIS: Higher Low Interest Rates Apparently Sink Ice Infrastructure
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – The Huntington Municipal Development Authority at a special called meeting Monday afternoon, Dec. 20, settled the debate on ice skating and ice hockey at the Big Sandy Superstore Arena.
Taking advantage of recent history’s lowest interest rates for the sale of Recovery Bonds for improvements to the Big Sandy Superstore Arena came in at 8.5%. That’s one percent higher than anticipated by both Huntington Finance Director Deron Runyon and Council Finance Committee Chairman Steve Williams.
Runyon in a published interview cited a “volatile market” for the higher than anticipated rates on the BBB+ rated bonds.
The bonds will be used to install new seats and a new boiler in the BSSA, as well as refinance existing obligations on the Jean Dean Public Service Building and the arena.
However, since council has only authorized $5.1 million of debt and stipulated that the annual payment remain the same or close to the current one, the interest surprise effectively means belt tightening in the form of one or more of the smaller projects may not be funded. To keep the payment within the range council approved, the actual borrowing may decrease $200,000-$300,000
Since the Recovery Bonds have a sale deadline of December 31 to qualify for federal subsidies, Runyon told the HMDA that this was on the “high end” of the estimate. This determination prevented the significant amendment rule which could have triggered additional city council consideration and perhaps additional advertising requirements.
Underwriters will now market the bonds, Runyon said.
Williams stated Monday that an interest rate higher than 8.5% would prevent the city from selling the bonds as they would be too expensive for the austere budget.
Essentially, the $200,000-$300,000 possible borrowing decrease eliminates the flexible “infrastructure” item, which had originally been designated for improvements related to the ice rink. With the costs up, this will remove the discretion --- and the disagreement --- over the value of ice at the arena, either for skating or hockey.
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ANALYSIS: Higher Low Interest Rates Apparently Sink Ice Infrastructure
By Tony Rutherford
Huntingtonnews.net Reporter
Huntington, WV (HNN) – The Huntington Municipal Development Authority at a special called meeting Monday afternoon, Dec. 20, settled the debate on ice skating and ice hockey at the Big Sandy Superstore Arena.
Taking advantage of recent history’s lowest interest rates for the sale of Recovery Bonds for improvements to the Big Sandy Superstore Arena came in at 8.5%. That’s one percent higher than anticipated by both Huntington Finance Director Deron Runyon and Council Finance Committee Chairman Steve Williams.
Runyon in a published interview cited a “volatile market” for the higher than anticipated rates on the BBB+ rated bonds.
The bonds will be used to install new seats and a new boiler in the BSSA, as well as refinance existing obligations on the Jean Dean Public Service Building and the arena.
However, since council has only authorized $5.1 million of debt and stipulated that the annual payment remain the same or close to the current one, the interest surprise effectively means belt tightening in the form of one or more of the smaller projects may not be funded. To keep the payment within the range council approved, the actual borrowing may decrease $200,000-$300,000
Since the Recovery Bonds have a sale deadline of December 31 to qualify for federal subsidies, Runyon told the HMDA that this was on the “high end” of the estimate. This determination prevented the significant amendment rule which could have triggered additional city council consideration and perhaps additional advertising requirements.
Underwriters will now market the bonds, Runyon said.
Williams stated Monday that an interest rate higher than 8.5% would prevent the city from selling the bonds as they would be too expensive for the austere budget.
Essentially, the $200,000-$300,000 possible borrowing decrease eliminates the flexible “infrastructure” item, which had originally been designated for improvements related to the ice rink. With the costs up, this will remove the discretion --- and the disagreement --- over the value of ice at the arena, either for skating or hockey.
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