The Sunnyside City Council last week gave its blessing to Sunnyside City Manager Bob Stockwell to oversee the refinancing of two water and sewer bonds. But the proposal was slightly different than what Council was presented with in March.
At the March 28 Council meeting, Interim Finance Director A.J. Housler presented Council with an option to refinance water and sewer bonds. The projected savings from refinancing the two bonds, one that was approved in 1993 and the second in 1996, was to be $172,000 annually. Housler told the Council in March that the refinancing would also reduce the bond covenant requirement from 140 percent to 125 percent. In layman's terms, that meant the city would only have to collect 25 percent more than the minimum amount to cover the financial requirements of the bond covenant.
But, Stockwell said last week that there have been some changes in what is going on with the bond refinancing.
He pointed out the city was unable to find an insurer to cover the refinancing of the bonds. Stockwell said the city will now market the bonds as 'not rated'. However, by not being able to find an insurer, the city will only save about $98,000 a year annually.
Stockwell said one of the reasons the city couldn't get the bonds insured was because it had trouble in meeting the 140 percent bond covenant requirement in the past.
Jack McLaughlin of Spokane's D.A. Davidson and Co. is heading up the bond refinancing issue for the city. McLaughlin said another reason the city was unable to get the bonds insured was because insurers were simply too busy to take a look at the issue.
"We still have a very good looking proposal," he said
McLaughlin explained the city will collect no more than $3.6 million from issuance and sale of the bonds, with market prices having been locked in this past Wednesday, with everything closing no later than April 26.
Stockwell explained for Council's benefit that by refinancing the two water and sewer bonds, the city will be able to take on the payments for an $11 million loan that will help pay for mandated improvements to the wastewater treatment plant.