Claremore City Council passesd a measure Monday night to refinance $24 million in Public Works Authority bonds saving the city $3.6 million.
The bonds originated in 2004 and 2005 and the bonds were used to fund utility, electrical, sewer and other capital improvement projects.
The new bond will be financed at a maximum rate of 3.75 percent and the principle and interest cost will be $6,516,870, according to CPA Ron Kolker.
The refinance will have a zero effect on the operating funds of the city, he added.
“The year of the loan is not changing,” City Manager Jim Thomas said. “Best case, we will save $3.6 million net of all expenses. We probably will not have to refinance bonds again.”
“This is a housekeeping issue,” Kolker said. “Some of these have been refinanced a few times.”
Despite the savings, some council members were concerned about the way the item was presented.
“It troubles me to see a 26-page document now and then I am asked to vote on a $24 million bond,” said Councilor Brandon Smith.
Smith’s concern was the amount of time permitted for review by the council when the documents were prepared weeks prior to the vote.
“It is fairly common place that things happen in the city and then we are asked to approve it later,” said Smith. “Yet city staff knows about it for months in advance. That is my frustration. This is not the first time this has happened. I would love it to believe it is not going to happen again; but at this point I am not completely convinced of that.”
“I too have a problem, what is actually in Claremore that this bond paid for,” Councilor Paula Watson asked.
“I did not look at what they were spent for,” Kolker said. “We are keeping the same bond pledge, we are just doing this to save money.”
After much discussion it was determined that the bonds paid for utility substations and other capital improvements, as well as the refinance of other past expenses.
When something like this takes a super majority to pass, the council needs several weeks to grasp the details, according to Watson.
“This is day 100 for me and it has been a great experience. Ron and I have met with bond council and we are confident. You have to have faith in the people that we have hired to review this. As we go forward we need to do a better job of giving you a little more detail,” Thomas said.
“Councilor Bill Flanagan, CPA, has reviewed everything in these documents,” Kolker said.
“The finance committee that Bill chairs met on this,” Mayor Mickey Perry said.
“The economy is pushing this,” Councilor Don Purkey asked.
“Yes, there is not a better time to do this,” Kolker said.
“Is it safe to say that the finance committee recommended this,” Perry asked.
Kokler explained that it had been thoroughly reviewed.
The council unanimously approved the measure, excluding Councilor Buddy Robertson, who was not present for the meeting.