City officials say the $32 million worth of bonds recently issued will address many needs.
First of all, the City will use $21.5 million to buy out the lease for the second and part of the third floor of One Main Street Center (the Annex) to the east just across North Division Street from City Hall. This should save the City about $385,000 each year for the next 30 years, compared to leasing it over that same time period. The life of the annex bonds is 30 years.
Next, the City will use $2.9 million of the bonds to refund a number of bonds at a lower rate.
Finally, the City will use the remaining $7.6 million to pay for downtown revitalization on the blocks south of City Hall.
The City will combine that $7.6 million with a $3 million Public Works and Economic Development grant it recently received from the Economic Development Administration of the U.S. Department of Commerce.
“That is the money that we are doing our City Hall Plaza project on as well as the restructuring of all our utilities on Division Street, which is being changed into the Promenade to prepare for new development,” said Auburn Mayor Pete Lewis.
The local revitalization bonds will be paid off in 25 years.
Auburn’s downtown development plan first suggested a pedestrian thoroughfare or promenade in 2001, starting at the edge of City Hall Plaza – central open space – extending south along the west side of South Division Street and ending at Third Street Southeast. To prepare the way for retail businesses and restaurants to take root along the promenade, city planners realized they would have to do a lot of underground work, widen the sidewalk on the western side of the street, lay down new pavement, add street grates, potted plants and install new lighting.
Standard and Poor’s informed the City on April 27 that it had received a AA bond rating. Standard & Poor’s credit ratings express the agency’s opinion about the ability and willingness of an issuer, such as a corporation or state or city government, to meet its financial obligations in full and on time.
An S&P analyst noted that the City’s good wealth levels, location in the Puget Sound area and financial management made for the strong rating. Also mentioned was that although there has been a drop in sales tax revenue, the City has done well to maintain strong fund balance and just overall has “a very strong credit.” A rating of AA differs from the highest rated obligation of AAA only to a small degree.
The rating will provide a higher marketability of bonds and in turn a lower interest rate as investors will be willing to bid for the bonds carrying a lower interest rate. The estimated savings to the City attributable to the rating, after the tax credit on the Build America Bonds, is $1.5 million over the 30 year life of the bonds.
Two weeks ago, the City Council ratified the 3.83-percent interest rate for which the City accepted the bonds.
“That is one of the lowest rates of interest we have ever achieved on a bond,” Lewis said. “It’s a Double A rating. One of the reasons our rating is so high with Standard and Poors and other agencies, even with this bond, is that we have so little debt in comparison to other cities.’
Councilmember Nancy Backus called the Double A rating “a huge accomplishment.”
The process that will allow City to buy all of the second and part of the third floor of the One Main Street building is called condominiumization. This lets the city buy the space inside the building.
“There are commmon spaces to that, but we own that floor,” Lewis said.
