The city and its taxpayers stand to benefit from the current bond market, which makes low-cost borrowing possible, according to a Meadville City Council discussion last week.
“It’s all good news,” Councilman Jim Roha said in reporting news of the recent bond issue.
Council approved a three-year, $8.1 million capital plan in August and authorized borrowing in the form of a bond issue for approximately half of that amount.
The city issued $4.175 million in bonds Sept. 20, according to interim Finance Director Tim Groves, with yields ranging from 0.4 percent in 2023 to 1.95 percent in 2044. But while the city will repay $4.175 million over the next two decades, the fact that the bonds were issued as premium bonds means that after all costs of issuance the city will deposit $4.275 million in its capital projects fund — an extra $100,000.
As Roha put it on Wednesday, “I think if this was baseball, they’d call it a grand slam.”
Groves chose more subdued language, but expressed agreement with Roha’s analogy.
“It was very good,” Groves said.
The yield of the bond issue is 1.99 percent and the bonds will have a call date of April 1, 2027, Groves added in an email. The call date allows the city to refund the entire bond issue to refinance at a lower rate, but Groves said that was unlikely given interest rates as “low as I’ve ever seen them.”
In discussing the outcome of the borrowing following the meeting, interim City Manager Maryann Menanno reiterated a point made multiple times when the capital plan was being considered by council over the summer. The projected capital expenses for fire, police and public works vehicles, technology upgrades and other improvements, she said, consisted of “needs, not wants” for various city departments.
“We’re trying to do what we have to do,” Menanno said, “not borrow excessively.”
Mike Crowley can be reached at (814) 724-6370 or by email at firstname.lastname@example.org.