Carmel City Council approves waterworks bonds sale to seek lower interest rate
The Carmel City Council unanimously voted this month to approve a sale of $59.7 million in utility bonds, in a maneuver aimed at saving the city up to $8 million.
Carmel Mayor Jim Brainard said the process is a “refinance” of sorts since the 2008 Junior Waterworks Bonds were sold to the Indiana Bond Bank. This amended ordinance allows the sale of those bonds from the Indiana Bond Bank to the Carmel Bond Bank, which will then issue its bonds at a lower interest rate, thus effecting savings to the Water Utility.
The savings will be around a half million dollars a year, if not more, Brainard said.
“It’s a great deal for the city,” he said.
The original aggregate principal amount for the bonds was approximately $64 million in 2008, but the city has since paid some of that off.
Clerk-Treasurer Christine Pauley requested that the council act on the proposal on first reading since interest rates might not remain as low as they are, and the council complied by suspending the rules and passing the ordinance unanimously, although Councilor Sue Finkam was absent.
Carmel recently created a bond bank, which is a municipal corporation that provides debt management services for a city. It’s a board of individuals, hand-selected by the mayor. Bond banks can save taxpayer money by becoming a well-known entity for bond investors. It also allows the city to consolidate and lock in lower interest rates. The bond bank cannot create new debt, only manage the debt that already exists.