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The City of La Grange will refinance its current bonds related to the Oldham Reserve property in hopes of lowering payments and havng a quicker payoff.
At the monthly city council meeting Monday, the council approved an ordinance authorizing the refinancing through the Kentucky Bond Corporation, an offshoot of the Kentucky League of Cities.
The refinancing will lower the city’s bond payments to $1.2 million a year, just under what the occupational tax projects to pull in for revenue. It will also eliminate an $8 million lump sum payment due in 2015.
As the bonds stand now, the city would be on the hook for payments until 2031, but under the refinancing, bonds will be paid off by 2024 if no extra payments are made.
The council received a second overview of the refinancing from Dwight G. Salsbury of Ross, Sinclaire and Associates, having previously discussed the issue with him at a special meeting in late April.
Salsbury told the council he believed the refinancing of the bonds would be under the corporation’s AA- rating, a significant upgrade over the junk bond status the city currently is saddled with. The better rating will receive a better interest rate, he said.
The bonds will likely be sold in late summer, Salsbury said, and the city will use an estimated $650,000 collected from the occupational tax to make a principal payment on the current bonds before refinancing.
The main clause on the refinancing is a five-year early payoff term, putting the city on the hook for paying the interest on the bonds for at least five years, even if they get enough money to pay off the entire bond before then.
The council, having been briefed on the issue months ago, easily voted through the refinancing. After the vote, Mayor Bill Lammlein thanked Salsbury and the KLC for the opportunity.
“I want to thank the League of Cities for letting us go in this pool,” he said. “I personally and publicly thank you.”
Utilities ordinances changed
The council also took up several issues regarding the La Grange Utilities Commission. The first ordinance overhauled language regarding the LUC director, which was requested by the commission. The changes clarified only close relatives of commission members or elected city officials couldn’t hold the director’s position and granted the commission the ability to fire a director, which previously only the mayor could do.
The council approved those changes 7-0.
The council also approved an ordinance changing some billing processes at the commission on a 6-1 vote. Lastly, a few voiced displeasure at a change in state law that no longer allows the council to approve the commission’s budget on a yearly basis.
The council was set to approve or reject the commission’s budget that includes a 2.5 percent increase in sewer and water charges, but the changed state law prevents such measures. The commission’s budget must still be presented, but the council no longer has voting power over it, Lammlein said.
The council also approved a $300,000 change in this year’s budget for renovations of a new police station at Second and Main, as well introduced the 2015 general fund, road, bus and alcohol licensing budgets for a first reading.
The budgets will be heard for a second reading and possible passage July 7.
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