Council talks debt, refinancing options
The city does not have an auditor and without one is challenged in find out precisely what its debt levels are and what it might want to do in terms of refinancing to clear them or pay for new projects.
The administration of Mayor Derek Slaughter told City Council’s finance committee this week the biggest piece is the audit and until 2019 and 2020 audits are done the city can explore these options.
“The administration is open to options that would save us money,” Slaughter said. “Currently, there is no auditing firm in place.”
Baker-Tilly, the auditing firm that did several prior years audits, disengaged with the city, Slaughter said.
Accurate calculation on the city debt and any kind of potential refinancing was brought up recently by Nicholas Grimes, city treasurer/tax collector, who has suggested it may be time to explore options with banks and lending institutions.
“When Nick asked about it given what was transpiring, obviously, were not sure it would be prudent to have this conversation now,” Slaughter said, referring to the need to get an auditing firm in place.
“The first thing a bank will ask for is the audit,” Slaughter said. “We don’t have 2019 or 2020 audits.”
Slaughter said he assumed the banks were not going to want a 2018 or earlier audit. “Obviously, they want a current audit. We don’t know our current debt situation.”
Councilwoman Liz Miele, committee chairwoman and council vice president, said waiting for a situation to become clear easily could take until the end of this year and the city might miss an opportunity to refinance.
“Is there a way to look at existing city debt?” Miele asked.
The city refinanced its 2013 and 2104 bonds into 2017, according to Joseph Pawlak, city interim finance director, noting it may limit the city’s ability to refinance again in that close of a window for lenders.
“I know there are some restrictions and it may be a moot point at this time anyway,” Pawlak said.
Currently, all city debt is underneath the 2017 item, with exception of a $2 million line of credit with Citizens and Northern Bank, Pawlak said.
He said he was under the impression that after the initial two year period on the line of credit, “it terms out for 10 years.”
“If the city decided to term that out it could be use the money for revolving funds for various capital needs,” Pawlak said.
“We have $2 million out there we are fairly certain we could refinance and not a whole lot else,” Miele said after listening to Pawlak’s explanation.
Pawlak noted that he was not involved in brokering the deal for the $2 million.
“I don’t know enough and would have to look at the documents,” Pawlak said unable to specify further without such a review.
The controller, Margaret Woodring, said she is in the process of preparing, along with Pawlak, a request for proposals for an auditing firm.