MUKILTEO — If this was a mortgage, the city just got a steal of a deal.
Acting on the heels of news that this city’s credit rating got a big boost, the City Council last week authorized the sale of $12.6 million in bonds to pay for a new community center.
The council’s 5-1 vote was a bit of a formality, since on Aug. 25 it had given Mayor Joe Marine the OK to move forward so long as the city secured an interest rate of less than 4.3 percent.
“It has been a long time coming,” Marine told the council. “Maybe there was a reason this took this long to have just the right project at just the right time.”
The project will replace Rosehill Community Center, an 82-year-old former school at 304 Lincoln Ave. Various organizations use the center.
Standard &Poor’s earlier this month boosted the city’s credit rating from AA2 to AAA, the highest rating obtainable. “Triple A is the best rating a city can have, and it is unusual for a city of Mukilteo’s size to have a rating that good,” said Alice Ostdiek, municipal bond attorney for the Seattle law firm Foster Pepper.
The city received a 3.54 percent annual interest rate averaged over 20 years. Over that time, the city will pay a total of $18.25 million for the new center — $12,585,000 for the bonds and $5,640,513.85 in interest, according to documents provided to the city by D.A. Davidson &Co.
“These are just great rates,” said Jack McLaughlin, vice president of public finance for D.A. Davidson &Co., the brokerage firm that handled the bond sale.
The higher bond rating means the city will save money over the 20 years it pays back the debt on the bonds purchased by investors Sept. 10, said Scott James, the city’s finance director.
He said the city can expect to save $744,236 through 2029 because of the lower interest rate it received as a result of the boost in its bond rating, which is similar to an individual’s credit rating improving.
Those bonds will be repaid without a tax increase, financed with real-estate excise taxes, which the city collects whenever property is sold.
Construction bids have generally been low during the recession, officials said, and the low bid on the new community center was about 37 percent below the city’s original estimate.
Last year, the council voted to abandon plans to renovate Rosehill and to have it torn down in the future. In a 2007 advisory vote, voters indicated they preferred a new building to renovation, 52.3 percent to 47.7 percent.
Plans call for Rosehill to stand until the new building is built.
Though most council members favored the new community center plan, Kevin Stoltz and Tony Tinsley argued against it.
Tinsley was absent during Thursday’s vote.
Stoltz said he was opposed to the plan because it doesn’t include a gymnasium and the community center was “more of a want-to than a have-to.”
Tinsley had argued that the city’s income projections were overly rosy.
Oscar Halpert: 425-339-3429, ohalpert@heraldnet.com.
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