City approves new bond issue for capital project debt
Published 8:49 pm Tuesday, February 2, 2016
By EMILY SPARACINO / Staff Writer
CHELSEA – An ordinance allowing the city of Chelsea to borrow $2 million for capital projects earned unanimous approval from City Council members on Feb. 2.
Matt Parker with Joe Jolly & Company Inc. talked to the council in a pre-council meeting about Chelsea’s new bond issue that will ensure the city has reserve funding as it pays debts on capital projects, including the new sports complex off Shelby County 11.
With the new bond deal, Parker said the company was able to lower the interest rate on Chelsea’s existing bond issue and secure $2 million in new money to refund the city’s 2009 bond issue.
“Your total debt structure is very short for a municipality,” Parker said. “You’re in good shape from a financial standpoint. Your new issue was well received in the market.”
Parker said the bond issue will keep the city’s annual payment at nearly the same rate and extend debt payment from 2024 to 2030, but it also will produce some savings – about $53,000 – for the city.
“It’s just lowering the interest rate,” Parker said. “Your situation doesn’t change a whole lot.”
The city will pick up the new money in 2024, Mayor Earl Niven said.
After 2024, the more than $1 million owed on the sports complex will be down to $280,000, the difference of which will be excess cash in the general fund or for capital projects. In 2030, the city will have no outstanding debt.
Parker lauded Chelsea for its latest AA credit rating from Standard & Poor’s Rating Services, which helped in the process of securing a new bond issue.
Chelsea’s rating increased from AA-minus to AA in 2015.
“You ought to be very proud of that rating,” Parker said. “An AA rating is excellent for a city of your size.”
The issue is set to close Feb. 16, Parker said.
“We’re very, very proud of our city with our financial conditions,” Niven said.
Three baseball fields at the sports complex are nearing completion, he added.
“We hope to be ready for some part of our spring season this year, so we’re looking forward to that,” Niven said. “That’s something we will be proud of for years to come. We need the very best of all things in Chelsea.”