CREATIVE FINANCING SAVES CITY $1.6 MILLION

Historically low interest rates combined with creative financing spell big savings for citizens of Cape Girardeau. Two separate refinancing efforts in recent months will generate more than $1.6 million in cash savings to the city of Cape Girardeau over the next dozen years.

Increasingly, those running a city have to be skilled in high finance. Cape Girardeau is fortunate to have officials skilled in this creative financing. Assistant City Manager Al Stoverink and Comptroller John Richbourg deserve particular credit in achieving these savings.

On Monday, the City Council will be asked to give final reading on a refinancing package that will save the city about $800,000. The package is three-fold:

The first element involves more traditional refinancing: reissuing 1988 and 1989 bonds at lower rates. The 1988 bonds financed relocation of fire station number two and construction of the solid waste transfer station; the 1989 issue was a combination of trunk sewer and special assessments on street projects.

From here the package becomes more creative, and the savings grow.

A second element involves issuance of bonds to finance $820,000 in street projects that will be paid through special assessments. These bonds give the city cash flow to proceed with construction, while property owners will make repayments over 10 years. Since the rate of bonds will be slightly lower than the rate of repayment, this method will also generate revenue for the city.

These street projects are categorized as economic development - paving of the Cape West Parkway in the Cape West Business Park, and the southward extension of Minnesota to adjoin the Highway 74 industrial park.

The third element moves farther into the realm of creative financing. The city has been financing employee pension payments through the state government employee retirement system. The city wanted to finance that debt independently at much lower rates.

To accomplish this, the city will pay off the system through an interfund loan from re~serves in the street improvement capital projects fund. The city has set aside reserves in this fund for completion of such major street projects as Lexington and the expansion of Sprigg. The bonds, in turn, will replenish the reserves to complete these construction projects.

This move alone will save the city close to $500,000 as it takes advantage of lower rates and a shortened bond term.

These savings will come back the community through bettered services and capital improvement projects that may not otherwise have been accomplished. For example, funds saved through the April refinancing of the bonds to construct the Show Me Center freed up more money for construction of the $3.7 million Convention and Visitors Bureau recreation project.

The shift in the retirement funds should also free funds in the city operating budget. All these savings will be factored into the city budget over the next 10 to 12 years they occur.

As tax dollars continue to be tight and interest rates remain low, we have no doubt creative financing will lead to other savings for the city. To these financial specialists we say: Keep up the good work.