Council looks to save $65,000 annually via bond refinance
Gahanna finance director Jennifer Teal said she anticipates the city would receive a strong credit rating when bonds from 2005 are expected to be refinanced early next year, saving the city $65,000 annually.
She told Gahanna City Council on Dec. 3 that the city would be rated by Moody's and/or Standard & Poor's prior to the sale of the bonds in early 2013.
When investors consider buying or selling bonds, they check out ratings from major security rating agencies, including Moody's and S&P, to assess the risk.
"We're in a strong position," Teal said. "We have things working in our favor. Our strong reserves are significant. That's the first thing they focus on.
"We've never dipped in emergency reserves. We've always had funds on top of that."
Moody's highest rating is Aaa and is defined as minimal risk, and Aa is a high rating and offers a very low level of risk. Standard & Poor's highest rating for investments is AAA, indicating an extremely high ability to meet financial commitments. The next-highest rating is AA, indicating a very strong capacity to meet obligations.
"We received AA in 2007," Teal said. "Only AAA cities are very large. We'll do our best with agencies to see what we come up with."
She said the creation of a debt policy and other management tools the city has established are sure to get Gahanna a good credit rating.
Teal said the proposed refinance -- called advanced refunding -- most often is done to reduce debt service on outstanding bonds.
"It's accomplished by issuing new debt at lower interest rates to pay off the existing debt when it is callable," she said. "As of today, we're looking at a 2- to 2.5-percent range."
Teal said the proceeds of the new debt will be deposited into an escrow account and be used to pay off existing bonds at their call date.
The team working on Gahanna's bond refinancing includes Brad Sprague of Prizm Municipal Advisors; Price Finley, bond counsel of Bricker & Eckler; a rating agency to be determined (Moody's and/or S&P); an underwriter to be determined who will structure the sale, determine the price and sell bonds to investors; and an escrow agent who will manage the proceeds and make debt-service payments on refunded bonds until their call date.
Council member Stephen Renner questioned the time frame for the refinancing process.
"We could move quickly once the 30-day waiting requirement is over for the ordinance," Teal said. "Once we pull the trigger, we could be done in March. It could move quickly once January hits."
In other discussion, council member Beryl Anderson said Gahanna residents who are going through financial hardships might be able to find mortgage assistance through the Save the Dream Ohio foreclosure-prevention effort. For details, they should visit savethedream.ohio.gov or call 1-888-404-4674.
She recently learned about the resource during an Ohio Municipal League breakfast.
"Time is of the essence when dealing home mortgages," Anderson said. "If you or someone you know is in need, this is an opportunity to get assistance and save the dream. With the holidays coming, people may be challenged with their mortgages."
Council also honored and commended the staff and friends of Gatsby's Bar & Grille for providing Thanksgiving Day meals for senior citizens in Gahanna for 30 years.
Gatsby's provides the food at no cost and even delivers to those who cannot travel to the establishment.
All of the food and drinks are donated by local food stores and businesses.
Council recognized Gatsby's owners Doug and Gina Vance, kitchen helpers Dick Larimer, Jack Petric, Bob Kurczewski, Tom Kurczewski, Mike Kurczewski Lori Larimer, Jim Hess, Joan Hess and Glen Fitzgerald and drivers Jeff Petric, Clint Sahr, Mike Allen and Andre Taylor.