North Little Rock's City Council approved action Monday to save approximately $1.65 million in annual debt payments on bonds issued for the city-owned Electric Department.
City aldermen authorized the city to use reserve funds to pay off a $7.9 million outstanding balance of a 2012 bond issue that will erase a $1.48 million annual payment.
A 2011 bond issue with a 4.68 percent interest rate will be refinanced at a lower interest rate and provide an estimated annual savings of $175,000, without extending the term of the bonds, according to figures provided to the council. Legislation for the replacement bond issue at a set rate will go back to the City Council at a later date.
Aldermen approved the separate resolutions in 7-0 votes. Alderman Maurice Taylor was absent for those votes but was in attendance later in the meeting.
"The money we save will reduce our annual expenses and will be used to replenish our reserves and for other uses," City Attorney Jason Carter told aldermen.
The recommendations for both resolutions came from the council-appointed Investment Advisory Board established in 2014. The board consists of Carter as a nonvoting member; city Finance Director Karen Scott; utility General Manager James Bray; and city Chief of Staff Danny Bradley.
The 2011 bond issue provided funds for the electric utility to move its headquarters from downtown North Little Rock to 1400 W. Maryland Ave., to build an electric substation in the Galloway area and to add "smart meters" for the city's electric customers.
The bonds to be paid off are a portion of a multi-issue, $60 million bond package that restructured bonds previously issued for the Murray Hydroelectric Plant and extended the plant's payoff date by 10 years, to 2025. Debt payments on those bonds didn't begin until 2015. The annual savings are to go back into the city's reserve fund.
The 2012 C bonds being paid off were issued to acquire about $10 million in new debt to help with the city utility's cash flow, according to information given to the City Council in 2012. The bond issue's A and B series provided the restructuring of three outstanding bond issues that included $44 million left on the hydroelectric plant's bonds. The hydroelectric plant is adjacent to Murray Lock and Dam and the Big Dam Bridge on the Arkansas River.
Metro on 06/14/2016