BOND REFINANCING MAKE PARK PROPOSAL A REALITY

Just as many homeowners have taken advantage of low interest rates to refinance, so has the city of Cape Girardeau. The result will be a considerable savings to taxpayers, those who will now get more bang for their buck in the Convention and Tourism Fund. The city has been a good steward of our investments in working to obtain the best rates on city debt.

The savings afforded by these lower rates is best illustrated by the Show Me Center project. When $5 million in bonds were approved by voters in 1983, the interest rate was 10 percent. The city refinanced the bonds to about 7 percent in 1987, saving about $700,000 in debt; and again refinanced at 4.88 percent on March 31, saving an additional $240,000 over the life of the bonds. This marks the last time the city will be able to refund the bonds before the debt is retired in 2004.

In other words, these refinancing moves will save Cape Girardeau taxpayers about $1 million in lowered payments. The money saved must remain in the Convention and Visitors Fund. In fact, the interest recovered from the first refinancing will be used to help pay off the new $4 million recreation project. Plans call for construction of a softball and soccer complex, and a multi-purpose building in Shawnee Park and acquisition of new park land.

Savings from the second refinancing won't be realized until November 1994, which is the call date of bonds from the 1987 refinancing. The reserve money in the Convention and Visitor Fund allowed the city to proceed with the recreation project bonds sale.

The city opted not to pay off the bonds early. Early payment would have abolished the motel/hotel/restaurant tax before its 2004 sunset date. And that would have meant no recreation project. This initial $5 million bond investment and taxes generated will allow the city to finance another $4 million in recreation projects with no additional taxes levied. In turn, this recreation project should generate more general sales taxes as well as additional motel/hotel/restaurant taxes. It's a domino effect.

The lower rates will help reduce financing costs of the recreation project as well. The $3.73 million in certificates were sold at an average coupon rate of 4.94 percent, well below the projected 5.5 percent. The remainder of the project money will come from excess tourism funds and other sources.

A volatile bond market did force the city to rescind an unusual agreement with Cape Girardeau banks. All seven banks had agreed to finance the recreation project at lower rates of return by buying bonds directly from the city. The banks joint offer was commendable. But we understand why the city decided to instead market the bonds directly through the Public Facilities Authority when the rates dipped even lower. They're trying to save as much money as possible to hold down recreation project costs.

Savings from bond refinancing help to make this recreation project a reality. And that should benefit all Cape Girardeau citizens.