Fort Smith Board approves bond refinance, ends broadcasts

“It was a favorable day at the bond market.”

That’s how Dennis Hunt of Stephens Inc. Investment Bankers described Tuesday’s (Jan. 17) sale of Fort Smith water and sewer refunding revenue bonds.

According to Hunt, the bonds all sold at a 2% interest rate, replacing the previous 4% interest rate and saving the City of Fort Smith an estimated $1.1 million over the next seven years.

Hunt reported the sales to Fort Smith city directors in their regular board meeting.

The new bonds will replace bonds that were issued in 2005, themselves replacements of 1999 bonds that were used for the Lee Creek water plant, Lake Fort Smith, and improving water transmission, storage, and distribution within Fort Smith. The 2005 bonds currently represent $17.2 million in outstanding debt.

SAVINGS DEBATE
City officials were pleasantly surprised by the savings; last week, in an memo, City Administrator Ray Gosack had estimated that the new bonds would save the City about $647,000.

But Bob Newbold, a Fort Smith resident and leader in the River Valley Tea Party, questioned the City’s calculations of savings. Newbold asked how much the issuance of the new bonds had cost the City, leaving Gosack and Deputy City Administrator Jeff Dingman scrambling to come up with the figure.

At first, Dingman said he thought the bond issuance had cost about $300,000; later in the meeting, he said it was actually about $325,000.

Newbold asked where the money for issuance had come from, and Gosack told him that the reported $1.1 million in savings was a net figure that accounted for the issuance cost.

“No, it doesn’t,” Newbold rejoined. “If you refinance from four percent to two percent, over seven years, you save $1 million. That’s not including the cost of issuing the new bonds.”

City Director Philip Merry Jr. responded that according to documents provided to directors, the gross savings for the revenue bonds were about $1.4 million, leaving a net savings of about $1.1 million, as Gosack had said.

Directors unanimously approved an ordinance authorizing the issuance of the bonds.

END OF TELEVISED BROADCASTS
Tuesday night’s meeting marked the end of televised board meetings for the foreseeable future. Directors unanimously approved an ordinance amending the City’s cable access channel policies and procedures, to remove references to live coverage of the meetings.

The twice-a-month televised meetings — on the air for about two years — were cut as part of deep budget cuts to find $777,000 for operations of the Fort Smith Convention Center. A 1% prepared food tax to support the marketing and operations of the center was rejected by voters on Nov. 8.

Cutting the televised meetings removed a $7,400 expense from the General Fund budget. Other budget cuts needed to support convention center operations include $317,900 from the Fort Smith Police Department, $121,000 from the Parks Department and $78,290 from elimination of certain merit pay increases.

To allow for a two-week rebroadcast of the Jan. 17 meeting, the Government Access channel policies will not be effective until Feb. 1.

City Attorney Jerry Canfield clarified that directors had already voted to cut the television broadcasts back in late 2011, when they cut them out of the 2012 budget. The new vote, he said, merely removed policy language that referred to the broadcasts.

The ordinance also gives a bit more leeway to political organizations to use the City’s cable access channel to advertise their events.

Fort Smith resident David Harris asked whether the League of Women Voters could advertise its election forums under the new changes, while Newbold wanted to know if the River Valley Tea Party could advertise its events. Both were told that the groups could advertise as long as their advertisements did not name any specific issue or candidate.

Fort Smith resident Elizabeth Mayo castigated directors for the decision to cut the broadcasts, saying the meeting represented citizens’ last chance to know what was going on in their board meetings.

City Director Andre Good responded that people could always attend the board meetings and that directors welcomed attendance and participation.