Eureka Springs council approves bond refinance

Tuesday, May 19, 2020

By Samantha Jones

The Eureka Springs City Council voted Monday, May 12, to refinance its Series 2012 Bond.

The council heard from Michael Moyers, a representative of Friday, Eldridge and Clark, who said the council needed to approve an ordinance authorizing the issuance of a sales and use tax refunding the bond for the purpose of refinancing the cost of capital improvements. Moyers said the 1 percent tax that secures the bond was levied in 1990.

“It’s the same tax that secured bonds going back quite a ways, at least until 2005 and maybe back further than that,” Moyers said. “The point of this is to save money. I believe savings are being made available to you.”

The bonds won’t be extended at all, Moyers said, and will reach maturity on Oct. 1, 2027 as previously planned. The one thing that sets this refinancing apart, Moyers said, is that the council doesn’t need a debt service reserve to make it happen.

“The purchaser of this one … has not required a debt service reserve,” Moyers said. “That just means you do not need to use proceeds of the bonds to fund a rainy day debt service fund.”

Moyers said the ordinance allows Mayor Butch Berry to immediately accept the offer to refinance the bond and sign a letter with a rate that was only offered through May 11. That’s why the council also needed to approve the emergency clause, Moyers said.

“The emergency clause is to give the mayor immediate authority to sign the letter to lock the savings in for the city,” Moyers said. “By accepting the letter of offering … the mayor is locking in the interest rate of the bonds. Otherwise, you’re going to be subjected to interest rate risk until the next council meeting.”

The council approved the ordinance on a first reading and then on second and third readings by title only. The council also voted to approve the emergency clause.

At the end of the meeting, Berry remarked that a lot of people were in town over the weekend. He advised citizens to stay safe.

“Wear your masks, please,” Berry said. “Practice social distancing. Wash your hands and be aware of what you are doing.”

The council’s next regular meeting is scheduled for 6 p.m. Monday, May 25.

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