Bremerton considers building bond refinance
BREMERTON ? The low interest rates making homeowners consider refinancing options is making waves in municipal circles as well.
The city of Bremerton is considering refinancing its portion of debt it secured for the Norm Dicks Government Center. The city might also opt to go with the group of borrowers that helped build the facility a decade ago.
Becky Hasart, Bremerton's financial services director, brought up the issue with the City Council's Finance Committee last week in a meeting about the sixth floor, which the city purchased and began using in 2004.
Hasart provided an early estimate that a refinance of just its portion of the government center bonds could save the city a net of more than $900,000 over 20 years.
Hasart said it is early, though, and estimates today are just that: estimates. "This is just us looking at our options," she said.
Market conditions giving the city the idea it can drop the interest rate from an average of 4.99 percent to 3.66 percent can change.
There is some question over whether Bremerton could go out on its own and refinance its portion of the bond debt without the other partners, said Tony Caldwell, Housing Kitsap executive director.
Hasart said it would be ideal to refinance the bonds as a group. Councilman Eric Younger said that might not be the best move for the city. "Maybe I'm wrong, but I'm not sure we want to pool with them," he said.
Hasart and David Trageser, senior vice president at the city's bond underwriter D.A. Davidson & Co., said attorneys at the Seattle law firm Foster Pepper offered a preliminary opinion that Bremerton could separate itself from the group in paying off its portion of the debt.
The bond was originally issued under the single umbrella of the Kitsap County Consolidated Housing Authority, the previous name for Housing Kitsap. Repayment agreements associated with the bond issue, however, call for separate repayment terms and give the city the ability to refinance its portion.
According to bond documents, the city purchased the sixth floor and part of the fifth floor, 16,424 square feet, or 24.91 percent of the project. The building, known in bond documents as the Bremerton Government Center, was built with the intent of housing several agencies and sold in condominium-like portions.
Other partners in the total $16.975 million bond issue include Housing Kitsap, the Bremerton Housing Authority and Kitsap County.
The earliest the current bonds, which run through 2034, can be paid off is July 2013. But the city could put the proceeds from new refunding bonds into escrow until then, said Trageser, then pay off the existing bonds when the July 2013 date arrives.
Whether the city does go its own way could depend on which option gives it the most savings, Hasart said. "We don't know until we look at the numbers."
Hasart said she plans to meet with Housing Kitsap officials this month to go over options. Should the city go out on its own right away, the entire process could be complete by the end of June.
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