CLAYTON -- The city of Clayton's Redevelopment Successor Agency may be able to save $610,000 over the next 10 years if a financial strategy approved by the council works, and it looks like it will, according to City Manager Gary Napper.
City officials' plan to basically refinance two existing bonds cleared the first hurdle with the Successor Agency Oversight Board approval May 16.
The early payoff is good news for city taxpayers, other agencies, and the county and the state, which will get a share of the interest savings. Clayton's share is estimated to be $41,733.
The plan is to refinance two existing Clayton Redevelopment Agency bonds at a lower rate of interest. Technically, it is not a refinance, but is called a bond refunding.
City officials inquired at several lenders and found the lowest proposed interest rate at JP Morgan Chase. They also compared financial firms that handle bond refunding, and chose Independent Financial Counselor Steven Gortier.
When Gortier gave a lengthy, detailed accounting of how it would work, Councilman Howard Geller and others grilled him with questions about costs and strategy at the May 6 council meeting. A consensus was reached not long after Councilwoman Julie Pierce said, "it's a no-brainer."
The plan is to issue a new 10-year bond in an amount to pay off the existing bonds plus costs. It will likely be issued and sold with interest of 2.3 percent or slightly higher.
Those funds will pay off a Series 1996A bond with four years remaining at 5.375 percent, and a Series 1999 bond with 10 years remaining with interest at 4.90 percent for two years, and 5 percent for eight years.
Currently the four-year bond payoff balance is roughly $230,000 (originally $7,720,000). The 10-year balance is approximately $4,330,000 (originally $7,460,000), but only $3,790,000 in new bond funds will be needed to clear those debts, including fees.
The next step is state approval, which both Napper and city Finance Manger Kevin Mizuno agree is very likely to occur in time for the planned June issuance date.
"Everything is on track," Napper said.
Contact Dana Guzzetti at firstname.lastname@example.org.