By Jennifer Eisenbart
Editor
With the City of Burlington looking to save money by refinancing one of its tax incremental financing districts and also start another, the issue of borrowing money drew a fair amount of discussion at City Council meeting Tuesday night.
The council unanimously approved two different general obligation bond sales – one for the refinancing of TIF District 3, the other for the money needed to develop the infrastructure for TIF No. 5, for the Aurora Health Care project on Spring Valley Road.
The first involves the sale of $4.325 million in bonds, the second $4.5 million.
“This is really the culmination of a number of things,” said Dave Wagner of Ehlers, the consulting firm that advises the city on bond sales. He said there would be two different stages of sales, one that first establishes the interest rates and then one that offered it to local banks.
“We do it in a way that offers the banks a chance to work together if they choose,” Wagner said.
The council is giving Wagner and City Treasurer Steven DeQuaker a set of parameters to work within, rather than have to come back to the council for exact approval, so the city can get the best interest rates for the project.
Wagner said the city hopes to get interest rates as low as 1.5 percent and cap the number at 2.5 percent. Recent market trends, however, see that edging closer to 2 percent.
Alderman Tom Vos asked about that because there were rumors that the rates would be rising again. Wagner called it a self-fulfilling prophecy, with the rates already beginning to rise.
The city will hope to save at least $400,000 with the refinancing of TIF District 3, and pay off the debt in full before the expected close in 2018. Wagner said the closing date of that TIF is expected between May of 2017 and May of 2018.
The starting of the new TIF for the Aurora project will have slightly different rules, Wagner said, because of an agreement by Aurora to guarantee the payments on the bonds.
Since Aurora will essentially make sure the payments will be made, the normal tax-exempt status for those buying the bonds isn’t allowed per federal regulation, as both Wagner and DeQuaker explained.
Alderman Jon Schultz asked about one final bookkeeping detail on TIF 3, wanting to have firm numbers to know how the closing of that district will help out the city.
Wagner said that is in the works. Officials are waiting for the full 2014 financial audit by Patrick Romenesko so complete numbers are available.
That is expected in the next two to three months.
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