Missed Opportunity? City Extends Bonds, Hopes for Lower Interest Rates

Lake Saint Louis may have missed the boat.

Jack Dillingham, managing director of Piper Jaffray's public finance group, told the Lake Saint Louis Board of Aldermen Monday night that the city missed its best opportunity to refinance its 2003 series bonds when interest rates were at their lowest this past April.

The city has expressed concerns about its debt service fund and the city's ability to continue making payments on its bonds as real estate assessments decline.

Dillingham reminded the board that the voters approved the sale of the bonds and that the ballot language said the city would levy a tax sufficient for the repayment of its obligation.

"This isn’t a new tax," he said, noting that the city had the improvements that the bond financed, and it was indebted to pay the money back.

One of the options he offered the board was to raise the levy, currently at 42 cents, to 50 cents, which would eliminate any issus with repayment and would not extend the repayment period.

The second option would be to raise the levy to 47 cents, and hope for an opportunity to refinance.

The third option was to extend the bond period another two years and still look for that chance to refinance.

Aldermen John Pellerito, Karen Vennard and Kathy Schweikert voted in favor of raising the levy rate.

Pellerito said, "We've been mandated to take the action necessary, that the voters put us in charge of. It’s time to buck up a little. I’m for the increase to 47 cents."

But with four votes necessary to raise the levy, the motion failed.

Richard Morris and Tony Zito both favored extending the bond period. 

"If assessed values stay the same or go down, it gets pretty serious when we get out there in four or five years," Schweikert said.