Bond sale to save city almost $1 million

Financial advisers for the city of Pine Bluff, Ark., on Monday re-sold bonds originally issued in 2011 in a move expected to save nearly $1 million over the life of the city's bond payments.

Representatives from Simmons, Inc. had suggested the city issue another bond sale to replace the original sale in order to take advantage of lower interest rates. A Simmons official on Friday compared the action to re-financing a home mortgage.

The bond sale occurred Monday morning, and the Pine Bluff City Council passed an ordinance at its regular meeting Monday night to accept and execute the sale to bond buyers.

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The 2011 bonds were issued after voters approved a five-eighths cent sales tax to purchase equipment for the fire, parks and street departments, as well as build a new fire station and a splash park, along with partially funding an aquatic and multi-purpose center. Sewer improvements were also funded by the initiative. The city is scheduled to make bond payments until Oct. 1, 2036.

Following the Monday re-sale at the lower interest rate, the city is now projected to pay $993,477.09 less than it would have under the old interest rate. Steve Miller, director of the city's Finance Department, said the savings could be applied toward the city's payments of other bond issues.

Leigh Ann Biernat, senior vice president in the public finance department at Simmons, Inc., said the re-sale was years in the making.

"We've been watching the 2011 bonds for a re-funding opportunity for some time," Biernat said. "The opportunity presented itself, and last year the City Council authorized the issuance of re-funding bonds."

The re-sale actually garnered savings of about $18,000 more than Simmons had projected going into Monday, Biernat said. The new bond issue will close in July, and funds from it would be used to pay off the old issue. Then the city's new payment, with a lower interest rate, would begin.

Tribune Content Agency
Public finance Arkansas
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