More than $1 million could be saved by the International Falls Economic Development Authority with approval Monday of a resolution to refund municipal revenue bonds.
The bonds secured in 2010 for the construction of the Voyageurs National Park headquarters building and Voyageurs Heritage Center, have 18 years left to mature at a current interest rate of 6.17 percent. If the bonds were refunded, it is estimated the new rate would be about 3.76 percent, which would result in a savings over time of about $1.095 million.
“It seems to me in light of how much we need some economic development here...it’s too much of coincidence,” said EDA Commissioner Paul Eklund. “We really need to push forward to see what kinds of jobs we can create and this savings seems like a bonus.”
Financing for the more than $8 million VNP project that sits on Rainy River on land owned by the city, came in the form of municipal revenue bonds to avoid costing taxpayers any money.
Steven Mattson, executive vice president and co founder of Northland Securities, told EDA commissioners, who also serve as city councilors, that he has been looking at refinancing options for more than one year. Northland Securities has been involved with the VNP project from the beginning. Northland Securities is a securities brokerage firm that works with municipalities on structuring debt and investment of funds.
“If we can sell these bonds based upon the interest rates when I did this analysis last week, we’d be able to save a total of $1,095,219,” Mattson said Monday. “That is net after all expenses.”
Mattson said the new bonds would be sold over the exact same time period as the existing bonds secured three years ago. The proceeds of the new bonds, he said, would be invested in government securities and would be used to pay the debt service on the bonds until Oct. 1, 2014 “when all bonds would be called in early.”
“Interest rates will probably not get any better than they are now and the EDA should move forward to sell the new refunding bonds as soon as possible,” he said. “We have this opportunity right now to do this.”
Commissioners agreed.
“My feeling is why not do this?” said EDA Commissioner Cynthia Jaksa. “And, I think we should move quickly.”
Mattson told the board that if a savings of at least 3 percent on the interest rate is not achieved and the refunding of the bonds is unable to be issued, Northland Securities and Briggs and Morgan, the bond counsel, will assume all liability and not charge the EDA for services.
“I would like to see a letter from Northland Securities and Briggs and Morgan that they’re going to share in the risk of this venture” EDA commissioner and Falls Mayor Bob Anderson said. “I’d hate to have the EDA be the only one having the risk.”
Mattson said he would arrange to have a letter from both his company and Briggs and Morgan by the end of the week.
“If we commit to the deal, it’s our risk,” Mattson said to assure the group.
In other business Monday, Mason announced that the EDA was scheduled to hear from a developer who is interested in establishing two projects within the city’s multimodal warehouse district, however, the developer was unable to attend.
“He contacted me late this afternoon that they are working to revamp the developer’s offer to the purchase agreement,” she said of the developer. “He received some news from one of the businesses that he is working with...which informed him they no longer can follow through on their desire to have warehouse space in the multimodal district.”
Mason said the developer is still interested in the same amount of acreage and wants Mason and the EDA to “rework the offer to purchase.”
“He knows (commissioners) may want him to look at a smaller piece of acreage because he has a smaller footprint,” she said.
Mason stressed that the developer “is optimistic” and is still interested in the property and is reworking the phases of his project.
“How big of a setback are we experiencing?” Anderson asked.
“The developer said it was a setback, but it wasn’t a setback that would jeopardize the remainder of his project,” Mason said. “He doesn’t want the project vision to change...he wants to purchase the land...he just has to rework his footprint.”
The board also Monday learned a grant to the EDA was received to facilitate public input regarding a plan for development of 125 acres known as the Donahue property.
The 125 acres of property, valued at about $1.8 million, was given by the Donahue trust in 2009 as a gift to the city. Part of the agreement was the city pay the brokerage fee of $15,000 per year for six years.
The property, which includes 1,440 feet of Rainy River shoreline, was a part of the Donahue Farm, located to the west of the Falls city limits, known for its produce offered for sale to local residents.
Commissioners agreed Monday that they will discuss with Andy Hubley, regional planning division director of the Arrowhead Regional Development Commission, the timing to facilitate a public process resulting in a vision for the future use of the property.
