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Branson Tri-Lakes News News Free - City expects to save $4.5 million

City expects to save $4.5 million

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Posted: Friday, November 16, 2012 1:41 pm

The city of Branson officials expect to save about $4.5 million after voting Thursday to refinance bonds related to the Branson Landing Tax Increment Financing District.

The city is taking advantage of “historically low rates” in an effort to save millions over the life of the bonds.

“We’ve talked repeatedly about taking advantage of the historically low interest environment we’re experiencing,” said Kelsey Spurgeon, with Columbia Capital, a firm providing counsel to the city. “Thanks to some strategic thinking by the city and the finance team, and, although I hate to admit it, a little luck, we are pricing the bond into the lowest municipal interest rate environment on record.”

She said the rates are so low because economic uncertainty is leading people to what they consider to be safer investments.

“I’m sure you’ve been reading the headlines about the U.S. heading toward the fiscal cliff,” she said. “People are investing in government treasuries and municipal bonds. The increase in demand drives interest rates lower.”

The net savings will actually be about $3.7 million, after the current reserve is excluded.

Jamie Rouch, finance director for the city of Branson, said the reserve is no longer required.

“When the Landing project was just beginning, there was no history of performance,” Spurgeon said. “The rating agencies at that time, required a reserve. It’s a form of security to bondholders. And now that there is a history of performance, showing coverage on the 2004 series bonds, the rating agencies and investors no longer require a reserve be set aside to provide for any kind of shortage of revenue.”

Bond savings are, in part, expected to cover the recently received bill from Branson Airport, about $217,000, according to City Administrator Dean Kruithof.

While the city always looks for cost-saving opportunities, they’re also cutting into the reserve next year in an effort to continue projects.

The city has operated with a 30 percent reserve in years past, but voted recently on a budget for 2013 that includes a 25 percent reserve – still higher than required.

“In lean economic times, that’s what the reserve is for,” Alderman Rick Davis said. “And we need to try to move forward, in this particular year, on many of the things we’ve identified as important projects.”

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