Topeka Nixes Refunding

Topeka city councilors last week killed a plan to refinance some $23 million in outstanding sales-tax revenue bonds that financed the replacement of a bridge spanning the Kansas River after the city’s bond counsel told them the proposal would violate Kansas law.

The city issued the original bonds in 2006, but the proposal was to have Topeka County issue the refunding bonds.

Phillip B. Wolfe of Nichols and Wolfe, the city’s bond counsel, said state law mandates that refunding bonds must be issued by the entity that issued the original debt.

The bonds are supported by revenue from a 0.5% countywide sales tax.

The project, which was completed in 2008, was financed with $26.4 million of sales tax bonds, $16.8 million in federal funds, and $850,000 of sales tax revenue.

The Joint Economic Development Organization, composed of elected officials in Topeka and Shawnee counties, voted in March to refinance the outstanding bonds. Topeka County commissioners approved the refinancing plan in early April.

County officials were advised that the refunding would result in savings of $1 million, but Kelsi Powell, senior vice president at Columbia Capital Management, the city’s financial adviser, said her estimate is that the savings would actually be about $163,000.

Powell said savings from the proposed refunding would be limited because the move would generate some $450,000 of negative arbitrage.

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