Funds are available for construction until next September. The final costs must be borrowed and officials want to take advantage of current low interest rates.
By LORRI HELFAND
Published December 17, 2003
LARGO - The city can cover construction costs for the new $21-million library until next September. Then, it will have to borrow up to $12.7 million to pay for the rest.
At Tuesday's meeting, the last of the year, city commissioners decided to take advantage of low interest rates instead of waiting to borrow at future rates.
Kimball Adams, the city's management services director, said he can't predict whether rates will rise or fall, but made the recommendation to act now.
"Why take a chance on rates going up," Adams said. "I think the right decision would be locking in rates today and making commitments today."
The bulk of the library construction costs, about $18-million, will be paid by the Penny for Pinellas sales tax. Most will be financed by borrowing against a portion of projected collections of that tax.
The city also has collected about $1-million in grants and is shooting for about $1.9-million in donations for the library, which broke ground in September.
Interest on the six-year loan and other fees could cost the city about $1-million.
The lowest fixed rate proposal as of two weeks ago was for 2.59 percent, but rates change quickly and may be different today, Adams said.
The two options on the table are borrowing funds immediately and reinvesting the proceeds until then. Or borrowing funds later, but locking in rates as soon as possible.
Either could save money in the long run. It could cost more to borrow early because returns on the reinvestment will be low. However, some banks charge a premium for locking in rates, which could drive costs a bit higher.
Commissioners unanimously gave the city manager permission to choose the best course of action today, depending on current rates and fees.
Mayor Bob Jackson said the move would free up a lot of money for other Penny for Pinellas projects in the city over the next six years.
Commissioners also gave the city staff permission to request bank proposals to refinance a wastewater loan in a similar fashion. The city owes $6.4-million of a $12.7-million loan borrowed in 1991 at 4.5 percent. The move could save about a half million dollars over the next eight years.
In other action, the commission:
Agreed to renew an agreement with 21 other law enforcement agencies throughout Florida to provide law enforcement assistance against gangs.
Approved the purchase of 25 vehicles for various departments at a cost of $414,999.
Approved the annexation of a 5.5-acre residential property on Kent Place.
