Ark Valley News - Kechi seeks to save money with bond refinance

Kechi seeks to save money with bond refinance
By David Dinell
Last Updated: July 15, 2015

Kechi officials want to reissue two series of bonds in order to capture a lower interest rate — and savings pegged at about $75,000 during the life of the bonds.

In that regard, the city council approved a resolution at its July 9 meeting authorizing the issuance of the bonds, which total about $1.7 million. A bond sale will be held at 7 p.m. Aug. 14 at City Hall. After the most favorable bid is received, the council needs to approve issuing the new bonds.

City Administrator Bob Conger said the new interest rate won't be known until the bidding process is done, however, a savings of 2 percent to 3 percent will make the process worthwhile. Conger likened the process to home owners seeking to refinance mortgages because interest rates have come down. And while there are fees involved, the net proceeds make it worthwhile, he said.

If approved, the new bonds will be issued in 2016. The two bonds are: Series 2006A, which is due to mature in 2022, and Series 2008A, which is scheduled to mature in 2028.

Those dates will remain, Conger said.

"We're not extending the life of those bonds," he said.

The bonds, however, will be new ones. The work of writing them and handing the paperwork will be managed by the firm of Piper Jaffray & Co., the city's financial adviser.

It's important to have the firm involved, Conger said.

"We want to be make sure we're legal and doing everything by the law," he said.

The bonds are general obligations bonds used for city infrastructure work and the savings — if the bonds are authorized — will be used in other areas of the city's budget, he said.

In another financially related development, the city will be seeking a bond rating. It currently does not have one, but Conger said given Kechi's budget picture in comparison to other cities its size, it should be a good rating, in the "A" range, meaning it could get a score from A-plus to A-minus. Such a rating is basically a city's report card of its financial health, he said.

"We're in good shape and have cash on hand," he said.

In other action, the council:

•Heard from Conger that progress has been made on collecting past due amounts on water bills. Since the new policies, about $10,000 has been collected, Conger said, who credited city staff for the revenue. Six parties of the original 36 payment plan customers have paid past due amounts in full, he said. In addition, there were 10 shut-off notices issued, however, all but two have been reconnected. But the city did run into an issue with two customers, who moved without notice or forwarding addresses. Combined, those two parties owe the city $1,800. The amount has been assessed to the properties, which are being foreclosed on.

•Received a report from Police Chief John Blevins about recent activity. He said the recent Kechi Fair went well along with the Fourth of July celebration. "No major problems or issues with fireworks," he reported. A part-time officer, Hobert Capps, has resigned because of a schedule change at his other job with the Park City Police Department. Blevins doesn't plan on replacing him as he can cover needed hours with his current staff. Also, the department received a report that marijuana might be growing inside a residence in the 400 block of Cheyenne Court. A search warrant was obtained and served. The case remains under investigation by the Sedgwick County Sheriff's Office.