Interest cost for Edmonds’ Civic Park bonds lower than expected

The City of Edmonds said its sale Wednesday of bonds for development of Civic Park exceeded expectations, with a lower-than-estimated interest bid that will save the city about $10,000 annually in debt service costs.

Seven firms submitted bids for the bond sale. Raymond James came out on top by submitting the lowest True Interest Cost offer of 2.188672%. According to the city, this low bid coincided with another key piece of news — the Federal Reserve’s decision Wednesday morning to cut its benchmark interest rate by 25 basis points (.25%) to the range of 1.5 to 1.75%.

The city had initially estimated the annual debt service on the Civic Park bonds would total $244,000. Now, the average annual debt service payments will be $234,138.

The news follows last week’s announcement that Standard & Poors awarded Edmonds its highest, “AAA” credit rating, the first ever for the city.

“We stated last week that the award of a triple-A credit rating would make our bonds a very attractive investment in the competitive municipal bond market,” said Edmonds Finance Director Scott James. “And that was borne out this morning with Raymond James’s favorable bid, which will result in real savings to the City of Edmonds to the tune of $197,000 over the life of the bonds.”

Mayor Dave Earling said he was “delighted by good financial news two weeks in a row. First we receive the coveted AAA credit rating and next thing you know it’s paying off in real terms for Edmonds and our residents.”

6 Replies to “Interest cost for Edmonds’ Civic Park bonds lower than expected”

  1. The low interest rate is good news. But a quarter of a million dollars in interest every year from our coffers is not chump change. I still believe we should have scaled down the project to be something we could better afford rather than giving the tax payers a quarter of a million dollar debt obligation every year. That might fix quite a few infrastructure problems. I do support the park! It could have been done using more fiscally conservative methods.

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  2. Chris, some good points but the total cost per year is about a quarter million dollars not the interest. The article could have been more factually correct if it displayed all the data. These are based on piecing together information that may not be totally accurate but it is the best we can do with what is presented.
    Total amount of bond: $4,000,000
    Annual avg Payments: $234,138
    Total Payments: $4,682,760
    Total Interest Payments: $682,760

    This would have given the pubic a clearer financial picture of the plan. This would then show how much extra we would be paying by financing rather than using other sources of revenue. What is not fully understood is where will the $238,138 per year come from? Will it be the General Fund or some other source of revenue?

    The Council for example could use the fees paid by developers to fully pay for the entire $4.7M and not even charge the GF. Too bad Council did not discuss these options.

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  3. Thanks Darrol for taking the time to present that clarification. That makes me feel a lot better. I really didn’t get that from reading the article.
    Chris

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  4. The Numbers King strikes again. Great job Darrol as usual. I think there is an argument both ways on using the General Fund vs. Development fees. There is something to be said for the future users of the park being in on the paying for it aspect. Of course, you could argue that future users will be paying either way, since the Development fees will be passed on to the new purchasers of property being developed. It kind of just comes down to which pocket you decide to take it out of. The pockets are pretty much on the same “users” (i.e. taxpayers) pair of pants. It’s kind of like when we were so excited about the Fed’s paying for our Connector but then realized we all pay those taxes too. “No free lunch” and all that. Let’s start thinking, streets, sewers, sidewalks and failing buildings and infrastructure. I know, the Marsh and stream day lighting beckons us, as does saving us all from pending doom without that Connector. Maybe we can get a few more deep pocket philanthropists to move here to finance all our needs and dreams.

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  5. Development fees and mitigation fees are not the only sources of fees from Development. By looking at all the revenue streams we would learn who is paying what. For general property taxes we all pay the same Rate and the amount is based on the value of our property. A mitigation fee is charged to a development on empty dirt. The Westgate complex paid around $1m of fees that in effect paid for things already built.

    The Port for example is planning to tax those of us in the Port District $400,000 to help support the total operations of the Marina, Harbor Square and their other buildings. So I pay for them but folks east of the top of the bowl can use them without paying the tax.

    Schools for example is property tax based and Edmonds has $11B of property of the $32B in the whole district. Edmonds pays for 1/3 for the EDS taxes. Libraries same story, Edmonds exports dollars to others.

    Back to our parks and local things. The revenues streams to the city are not the same as the “pocket analogy” Some revenue streams do not come from the current taxpayers it comes from others. Car sales tax is one of the largest contributors to our sales tax revenue so folks buying and taking delivery at our Edmonds car dealers are making a contribution to our general fund.

    Where we get our money is important for all of us to understand and how we spend it is equally important. With the passage of I-976 we will not be charging our selves for local moneys supporting our transportation infrastructure but hopefully our Council will propose other ways to pay for our failing infrastructure. Based on their past unwillingness to address failing infrastructure it is difficult to see how they will see fit to find a way to pay for the broken stuff. It is “easier” to commit to new things and let the future taxpayers pay for the new stuff.

    Sorry for the long reply but our 2020 Budget discussions should now take center stage in the life of our city now that the elections are over!

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  6. Great reply and no problem with length. That’s why we have and need you. I’ll quibble a little because I also live in the port district and that tax also comes out of my “pocket” so to speak. (I don’t particularly object as I think the Port brings us a lot of return and is one of the better features of our town as it relates to the outside world and ourselves). I also recently purchased a car at an Edmond’s dealership so that sales tax is also out of my “pocket” so to speak. That said, I think you are right on about the 2020 budget discussions. “Needs” need to start coming ahead of “wants.” I think we are really good at confusing the two as a town in general. It might make more sense in the long run to put the needs under bonding and the wants more on a pay as you go basis. It might be good to get the needs bonded sooner than later, before interest rates rise as they will have to sooner or later. Feel free to correct me if this is “stinkin, thinkin.”

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