Chardon Officials Pleased With Bond Interest Rate

September 13, 2012

City of Chardon officials are pleased with the market response to sell up to $5 million in municipal bonds to finance the new city service garage complex.

Out of eight companies that bid to underwrite the bonds, UBS Financial Services of New York City was the winning low bidder because of the 2.36 percent interest rate it will charge the city for the $4,945,000 in bonds.

“We’re very pleased because we got a much lower rate of interest than we thought we would,” said City Council President and Mayor Phil King.

The city’s bond consultant had predicted the city would get a 2.5 percent interest rate, he added.

The low interest rate shows “the desirability of our bonds, the financial security and health of the city, and how well managed our city funds are,” King said.

Also helping was an AA- bond rating the city has from Standard & Poor’s Ratings Services, Chardon Finance Director Matt Rogonjic said.

The new bond rating is three levels higher than the previous A- rating given the city, he added.

Based on the lower-than-expected interest rate, Rogonjic said the city would pay $1.6 million interest over the next 20 years, bringing the total cost of the project to about $6.6 million.

The amount of bond sales does not correspond to the estimated $4.6 million construction cost of the facility because the bond money also includes the cost to replace some equipment burned in a 2008 fire that destroyed a former city garage on Park Avenue, City Manager Randy Sharpe said.

Earlier this year, two Chardon residents filed an appeal of the City of Chardon Planning Commission’s decision to issue two variances and conditional use permit allowing the new service garage to be built on residential property at 499 N. Hambden St.

On Aug. 7, Geauga County Common Pleas Court Judge Forrest Burt ruled the planning commission’s decision was neither illegal nor unconstitutional.

The court’s ruling has been appealed to the 11th District Court of Appeals in Warren.