Less of Carmel taxpayers’ money will be used to repay old city debt, which will mean more money in city coffers for years to come.
Five weeks ago the city’s bond consultants said they hoped that by refinancing about $152 million in old debt, they could save the city about $3 million. And when the city passed resolutions allowing the refinancing, the estimate was $5 million in savings.
But when the bonds actually hit the market, the favorable results yielded $7.9 million in net savings.
The effort was no doubt bolstered by a recent bump Standard & Poor’s gave to the Carmel Redevelopment Authority’s when it raised the agency’s local income tax bond rating from “AA-” to “AA” on April 24 and affirmed the City of Carmel’s general bond rating at “AA+” as part of a financial assessment.
Analysts said the upgrade was based on improved debt service coverage, growing county option income tax revenues and the strength of the underlying economy.
“This rating and successful sale shows that the bond market is very optimistic about the city and it’s fiscal management,” Carmel Mayor Jim Brainard said.
The city’s COIT bonds were refinanced to allow for $331,000 in savings per year over the life of the bond. It should be paid off in 2027. Tax revenue that would have been spent on this debt would remain in the city’s general fund.
Bonds associated with the construction of the Center for the Performing Arts were refinanced to allow for $3.48 million in savings as the bonds are paid off by 2033. These savings will be directly deposited in varying annual increments into a special reserve fund overseen by the CRC board.
None of the refinancing extended the terms of any of the bonds.