Sun Feb 12 2012
by Laura Freeman
Reporter
Hudson -- The city plans to refinance $17.35 million invested in four unfinished projects as previous one-year notes are set to expire.
Council in September will consider City Finance Director Jeff Knoblauch's recommendation to issue a single $17.35 million note for four unfinished projects: the $6.9 million purchase of the former Cuyahoga County Youth Development Center; the $3.7 million Atterbury Boulevard reconstruction project; a $3.2 million electric transformer; and $2.85 million for the Seasons Road interchange development project.
Notes are short-term loans normally maintained for one year until the final costs of a project is known. After that, the one-year note is converted to long-term bonds, Knoblauch said.
Council last year approved four separate notes, totaling $16.65 million for the four projects. Those notes will mature Oct. 5.
The interest rate on the old notes was 0.81 percent, and Knoblauch said he expects the new rate to be comparable and under 1 percent.
Of the four projects, the electric transformer is nearly completed and cost about half of what was estimated, Knoblauch said.
"We budgeted conservatively," he said.
Low interest rates, the reduced costs of precious metals, and more competition among bidding companies led to the lower cost, Knoblauch said.
He recommended the city pay down the debt on the maturing note and roll the balance into a new note. He recommended issuing $2.3 million in new debt for new transformers and switch gears at the College Street substation, a project budgeted this year.
"If you can do these projects now; now is the time to take advantage of the prices," Knoblauch said.
The debt will be funded through the Electric Fund.
Seasons Road project costs will be lower once a Joint Economic Development Zone agreement is signed and Cuyahoga Falls pays a third of the costs, or $616,000, for the interchange work, City Manager Anthony Bales said. The debt will be repaid from the general fund.
The city has applied for $5.5 million in federal funding for the Youth Development Center purchase and expects Summit County Metroparks to contribute $500,000 toward a portion of the land that they will manage but not own.
The city is still waiting to find out if it will receive any federal funding for the YDC property more than a year after they announced purchase plans, Bales said. If the city doesn't receive federal funds, the debt will be paid with $5 million from the general fund and $2 million from the park fund. Summit County is the temporary title holder while the city seeks grant and other funding.
The Atterbury Boulevard project, which will be financed from the general fund, is scheduled for completion in 2011.
E-mail: lfreeman@recordpub.com
Phone: 330-688-0088 ext. 3150
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