LAKEPORT — Financial advisors informed City Council this week that it stands to receive up to $2 million in the sale of redevelopment agency bonds. The market is good for bonds, and the city has a “very good credit rating” of A-minus, comparable to the credit rating of “the best community in the San Francisco Bay Area.”
“You can pat yourself on the back, because this means your interest rates will be lower and lower interest rates means more money,” Financial Advisor Mark Northcross said, of Northcross, Hill and Ach Inc.
The 30-year bond will pay for immediate projects the city needs to complete sooner rather than later in order to get the “biggest bang” for the dollar. Construction costs will “only go up” if the city waits until a later date to start projects, City Manager Jerry Gillham said.
“The real estate developers use other people”s money and they borrow to the hilt,” Northcross said, comparing the city”s bond sales and “necessary debt” to strategies employed by those in the real estate business. “You”ve got to have as much cash to develop as soon as possible ? you want the longest term possible.”
A concern of some of the city councilmen was that the city does not immediately need the money, which added to a bond it sold in 2004 amounts to $5 million that can be spent on redevelopment projects.
But the city would have to reapply for another credit rating if it delayed selling the bonds until projects arose. “I would say that”s your call. It”s a project driven-financing, it is worthwhile to do. Palmdale, which has a population of 100,000, has done tax bonds of $3 million, it was either not do the small borrowing or not to do the project,” Northcross said.
Businessman Bill Brunetti spoke to the council, asking them to approve the sale of the bonds because “unanticipated” projects could come up, which the city would then have to forsake if it didn”t go forward with the bond sales.
“The time to borrow is when the time is right. We have some good projects. I never thought I would see the kinds of things going on in the city of Lakeport in my lifetime. Whatever happens a year from now ? you want to be ready for that. You have the flexibility to do this now. I would encourage you to do a favorable vote on this,” Brunetti said.
Councilman Jim Irwin said the downtown plan ? the only major, multi-million dollar plan currently on the drawing board for the city”s redevelopment agency ? could be paid for now, without the bond sales.
“I think we need a better list of projects, we can fund the downtown plan right now, with the money in the bank,” Irwin said.
Melissa Fulton, CEO of Lakeport Regional Chamber of Commerce, asked the council to approve the sale, adding that she is “very pleased to be involved in the downtown Lakeport transformation project after being here for 19 years.”
Downtown business-owner Leslie Firth, representing the Main Street Association, said, “We”re looking for a favorable position. Some of us are working very hard to see what kind of improvements can be made in our town.”
The council unanimously approved the sale of the bond after city staff reassured members they could devise a list of detailed projects the city could fund with the bond money.
Contact Elizabeth Wilson at ewilson@record-bee.com
