Refinance Saves Atchison Nearly $200,000 as City Essentially Maxes Bond Rating
When Atchison City Commissioners approved the $4.8 million bond sale on Monday, they ensured funding for two key projects while saving money on a pair of old debts.
The bonds will pay for the Police Department renovation currently taking place on the first floor of the west side of City Hall. The bonds will also pay for an office space build out on the first floor of the Atchison Event Center. Those projects will cost about $1 million each. The only debt that should be felt by city coffers is the Police Department renovation project, since a signed lease with the Kansas Department of Children and Families will more than cover the costs of the AEC portion of the bond.
Meanwhile the City was able to save money by refinancing General Obligation Bonds from 2011 and a Kansas Department of Health and Environment loan. The 2011 GO Bonds, originally used for a fire truck and city street improvements, had about $850,000 remaining to be paid. By refinancing the GO Bonds, the City will save about $40,000 in interest costs, while still retiring the bonds by the original date of 2031.
The KDHE Loan, which was used for wastewater system improvements mandated by KDHE, still had about a $2 million balance remaining. Refinancing that debt will save Atchison ratepayers more than $152,000 in interest costs, again maintaining the original payoff date of 2031.
“We knew we would be able to save some money on the refinancing side, but the rate was even better than expected,” City Manager Becky Berger said.
Mayor Shawn Rizza said the one portion of debt that isn’t at least budget neutral was for something that was long overdue.
“The Police Department rarely asks for anything and they have really needed more space for a while now,” Rizza said. “We hope that this remodel can help a strong department perform even more efficiently in the future.”
The bond sale came with a bid of about 2.3% in true interest costs from Commerce Bank. That interest rate, while a composite number, represents real savings for the City on those old debts, despite an added expense of about $2 million in new debts.
Additionally, during the bond sale process, Moody’s Rating Service refreshed the City’s bond rating, which is akin to a credit score on the bond market. Atchison retained its A1 rating, which Moody’s officials explained was the top score Atchison is eligible for without a substantial increase in the size of Atchison’s economy.
It was commented that Atchison has a healthy debt load, strong fund balances, and the right financial processes and procedures in place to ensure financial stability moving forward.
For more information contact Joe Warren at (913) 367-5500, or Joew@cityofatchison.com.