The City of Oakdale is looking into refinancing Bridle Ridge development bonds that will likely generate significant savings for the property owners and also generate capital funds for the road maintenance in the Bridle Ridge subdivision.
On Monday, Dec. 15, Oakdale City Manager Bryan Whitemyer presented a plan that is estimated to generate over $1.4 million in taxpayer savings over the life of the bonds.
The city plans to apply some of its savings, $833,491 over the life of the bond or approximately $39,000 annually, for street maintenance in the Bridle Ridge subdivision that currently does not exist.
Whitemyer said the streets in the Bridle Ridge subdivision are nearly 10 years old and are starting to show their age. They need minor road treatments such as crack seals and slurry seals to extend the life of the roadway.
“Currently, the city does not have sufficient funds to do this work,” said Whitemyer. “This bond refunding will provide a reliable stream of funding that will enable the city to do more regular maintenance on the roadways in the Bridle Ridge subdivision.”
According to Whitemyer, there would be individual taxpayer savings also to residents of the Bridle Ridge subdivision in the accumulated amount of $626,324. Whitemyer said this would work out to approximately $12 to $42 from annual tax bills, depending on the phase of when the particular resident’s home was built.
To facilitate the issuance of the Refunding Bonds, the city will use Del Rio Advisors, LLC and A.M. Peche & Associates LLC.
Ken Dieker of Del Rio Advisors told the council that interest rates are at “near all-time low rates” and, with the financial situation of many cities, there is a lack of supply in municipal fund investments making non-land related deals very attractive to investors.
“Time is of the essence to take advantage of the current market,” said Dieker.
Dieker also said three banks had bid on the refinancing, all coming back at less than three percent.
Also as part of its financial reconstruction and cost savings, the city is planning on refinancing its wastewater bonds.
In 2002, Oakdale issued wastewater treatment plant bonds in the amount of $2,680,000.
The current remaining amount on that bond is $1,340,000 with a final maturity date of March 1, 2022. The city is also required to maintain a reserve fund for these bonds in the amount of $217,743.
When the bond was issued, the average interest rate was 5.12 percent.
Whitemyer said that with the refunding rate being only three percent, the refunding would lower the overall debt service by approximately $11,744 per year to the sewer fund for the next five years and the payoff will occur one year earlier.
Dieker said the refunding is shortened by one year since prior issue of having to have the reserve fund on hand would be used to pay the final year’s payment.
For the waste water fund refinancing, permission for refunding is required by the State Water Board, but neither Whitemyer or Dieker thought that would be a problem.
It’s planned that the council would finalize the refinancing and it would close in February 2015.