City receives favorable rates to refinance bonds

by Marianne Gasaway

Current market conditions will yield some substantial savings for the City of Clear Lake in 2021.

Proposals for the City’s General Obligation debt financing for the $1.2 million Marriott Hotel and event center forgivable loan, and $600,000 for land acquisition to develop a park and facilitate library expansion, were received Monday, Dec. 21. Each note received interest rates of less than 1 percent.

City Administrator Scott Flory reported to the City Council that Clear Lake Bank & Trust will finance the bonds for the Marriott project at an interest rate of 0.55 percent. Manufacturers Bank & Trust will finance the bonds for the tax-exempt land acquisition at an interest rate of 0.42 percent.

The Council is expected to award the bond notes at its Jan. 4 meeting.

Flory explained the City shopped not only local, but a few outside financial institutions in an attempt to gather comparative data.

“There was good interest and we received very good, favorable rates,” he said.  Local banks prevailed.

Flory added that it seemed appropriate that CLB&T had the low rate for the seven-year note on the Marriott project, since it is also providing commercial financing to the developer.  

At its last meeting of the year, the City Council unanimously approved a resolution to fix a date for a public hearing to consider refinancing General Obligation Economic Development Bonds issued in 2014 in connection with McKesson locating in Clear Lake.  The City previously issued $1,620,000 in the bonds March 31, 2014 and reserved the right to prepay the outstanding balance on June 1, 2019 or any date thereafter.  Based on the positive, preliminary feedback from community banks and the favorable interest environment, proceeding with the refunding at this time makes good sense, according to Flory.  The estimated savings available to the City is approximately $19,000.  

The public hearing will be held Jan. 4 to consider the refunding loan agreement in a principal amount not to exceed $715,000.