School bonds hinder city project financing
Weaver calls
situation
a mess
By BECKY BROOKS
Enterprise Editor
clydenews@bizwoh.rr.com
The City of Clyde is finding its financial hands are tied as a result of the Clyde-Green Springs Exempted School District issuing bonds and notes to cover about $19 million in construction costs for the new schools project.
City Finance Director Christine May said at a Tuesday night council meeting that the problem was discovered when the city prepared to issue general obligation bonds for a substation at Revere Plastics.
Upon contacting the city's electric bond counsel, the finance director was informed the city was past its limit on issuing general obligation bonds to finance projects.
May told council Tuesday night with the "G.O. bonds" the city already has out and the school bonds, she also cannot transfer notes sold to finance the city pool into G.O. bonds as she had planned.
Later the city finance director reported that the pool "notes" could be rolled over into "revenue bonds", which will cost the city more money due to higher expenses and higher interest rates.
City Manager Dan Weaver called the situation a roller coaster with bond counsels giving the city various answers initially about issuing general obligation bonds due to the school district debt.
"What we consider it's a screw up on bond counsels part," he said.
City officials said they are not sure where the mistake was made as initially they believed the school project would not affect the city's bond issuing ability.
"Now our bond counsel has told us it has to be a revenue bond instead of a general obligation bond," he said, noting the city must pay more for financing projects.
During the Tuesday night meeting, the council members approved a resolution to allow $1.5 million in notes or bonds to be issued to pay for the construction of the planned Clyde Light and Power building on Premier Drive.
May said that until bonds or notes can be issued to cover the project, initial checks could be written out of the city electrical fund and then be repaid with the approval of the resolution.
"It just covers our ability to be paid back if checks have to be written," Mayor Scott Black commented.
Weaver said that American Municipal Power -Ohio has a financial note program which would be a cheaper option with a low-interest rate and short-term notes. He said the city is investigating that program to avoid more bond sales.
Biomass project dead
In discussing electric projects, Weaver also announced that the city is no longer considering biomass gasification as a possible means of generating electric.
"As far as we are concerned that project is dead in the water in Clyde," the city manager said.
"It's too new, too untested for AMP-Ohio to get involved," Weaver said, noting the city had been working through AMP-Ohio on the project.
Clyde worked with Princeton Environmental for several years to bring a plant to the city to generate electricity.
The cost of biomass generated electricity would end up being 8 cents per kilowatt and escalate up to 13 cents per kilowatt, Weaver said about buying from a plant today.
During the meeting, the city manager announced that council clerk Tami Steinbauer was resigning her position. The council will meet at 7 p.m. Tuesday, Aug. 26 to review candidates for her position.
Also at the meeting, Weaver reported that the new South Street dog park was completed and that the park is already getting use.
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