SPRINGDALE — The city’s bond program will be ready to go at the end of November, with a low interest rate locked in and commitments made to purchase almost all of the bonds.
The city will pay an average of 2.82 percent interest on the bonds, said Bob Wright, senior market director for Crews & Associates. Crews and Stephens Inc. are underwriting and selling the bonds.
“The city was lucky,” Wright said. “When we started this process, we had a very low interest rate and it has gone down a little since then.”
If Springdale sold bonds last year, the interest cost would have been $3.8 million more, Wright said. If it had sold the bonds in 2010, the cost would have been $8.3 million more, he said.
The City Council approved the bond sale, the interest rates and the repayment schedule Tuesday. The bond program was approved by a low turnout of voters in August.
The bonds will be repaid with revenue from a 1 percent sales tax. The tax was first approved by voters in 1993. A schedule calls for a $4 million payment on bonds in 2012, with the repayment going up $100,000 per year. The highest yearly payment will be $5.8 million in 2032.
Carroll Marbury, a Springdale business owner, said he’s usually opposed to higher taxes and greater debt by cities.
“This one seems to be a good deal,” Marbury said. “I am a supporter of the program.”
The city will assume $66.2 million in debt, Wright said, while bringing in $67 million in construction money.
“I think the city is getting a big bang for the buck,” Wright said.
The city will pay $29.2 million in interest over the 20 years it will pay off the bonds, according to a report from Crews.
After fees and reserves, the city will have $8.5 million for fire station construction, $16.1 million for parks and $42.7 million for street improvement, according to the report.
City officials plan to move two fire stations and add one station. Plans also call for construction of two parks, one in the southeast section of the city and one in the northwest.
Street improvement will begin with construction of the Don Tyson Parkway interchange on Interstate 540. Other projects will be undertaken with remaining money.
The low interest rate didn’t discourage the purchase of bonds, Wright said. Investors have committed to purchasing almost all of the bonds, he said.
“We might have a million or two left to sell,” Wright said. “We received commitments after we locked in the rates Tuesday.”
The city will be able to begin purchasing land for the fire stations and parks immediately, said Wyman Morgan, city director of administration. Purchases will not close until money from the Nov. 29 bond sale is received, he said.