Iowa Officials to Atlantic: You can’t restructure debt to save money on sewer bonds
June 5th, 2013 by Ric Hanson
The Atlantic City Council Wednesday, was forced to table indefinitely, action on approving resolutions pertaining to a bond purchase agreement and issuing of Sewer Revenue Bonds, because the Iowa Finance Authority won’t allow it. City Administrator Doug Harris said he received the bad news late Wednesday afternoon from Chip Shultz, with Ruan Securities. Shultz told Harris the IFA won’t allow the City to restructure the debt, even though officials with the State Revolving Loan Program had initially indicated there wouldn’t be a problem with it.
The City had hoped to save on the amount of interest it pays on the bonds by restructuring at a lower rate, or by drawing down on the remaining $6.6-million from the State Revolving Loan Fund. However, delays by Ruan Securities in issuing the bonds over the past two months means the City lost its chance at grabbing a lower interest rate. Harris says the City lost $12,150 it paid to achieve a Standard and Poors rating on the bonds, also, but Schultz promised Ruan Securities would reimburse the City, since problems on their end caused the delay in getting the bonds issued.
Those problems included staff changes at Ruan, and an assumption the interest rates would continue to decline or remain nearly level, instead of increasing with an improving economy. Harris said the setbacks won’t change the amount the City receives in increased sewer revenues, at least in the short-term. In addition to tabling the bond purchase agreement, City leaders had no choice but to table a resolution approving the issuance of Sewer Revenue Bonds.