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By JoEllen Black/Richmond News
Two projects – municipal complex refinancing and the south wastewater treatment plant – are at the top of the to-do list for the city of Richmond in 2013 while keeping an eye on city growth in a beleaguered economy.
Richmond City Council will likely hear from Jack Dillingham of Piper Jaffray at its Jan. 22 meeting on re-financing the city hall complex and fire station. Dillingham will present information on a 30-year bond obligation to pay down the $4.3 million debt over 30 years. The council was considering a two-year loan extension by Bank Midwest that keeps interest rates at 4.25 percent until 2017. The original loan was $4.67 million in July 2008. The project was originally set at $3.8 million, but an additional $1 million was approved by council in June 2008.
“I don’t think interest rates are going to get much lower. By 2017, interest rates will be much higher,” City Administrator Ron Brohammer told the council in December, adding that after eight to nine years, the council could shorten or lengthen the loan time.
While a 30-year bond obligation would extend the loan, a downside, it would lock in interest rates at 4.2 percent and decrease annual debt payments to around $252,000, Brohammer said.
Re-financing is on the front burner for 2013 because funding from the quarter-cent sales tax is falling short of covering its annual payment. Brohammer explained that a one-cent sales tax roughly translates to $950,000 to $1 million in revenue. The municipal complex quarter-cent sales tax currently generates $200,000 to $250,000 annually, falling about $55,000 to $60,000 short annually on the municipal complex payment. That shortfall is currently taken out of the city’s general fund to cover the debt.
“It’s there. We now have to live with and move forward,” the city administrator said.
Brohammer said re-financing would recoup around $30,000 that is currently taken out of the general fund to pay for the municipal complex debt service.