The Potter County Commissioners Court and Amarillo City Council recently took action regarding the repayment of bonds for the Amarillo Potter Events District, saving the city and county money in the long run. .
The two entities approved a resolution repaying the issue of outstanding bonds in 2009 due to lower interest rates linked to the COVID-19 pandemic. Deputy city manager Laura Storrs said the move would save Amarillo a lot of money.
Steven Adams, a consultant for Specialized Public Finance, gave city council some details about the savings if the resolutions were approved.
“The bonds we are repaying were sold in 2009. It had an interest rate of 4.02%. These bonds that we have sold have an effective interest cost of 1.32%, ”he said. “This difference in interest rates allowed us to achieve present value savings of $ 356,000, or 8.6% of the debt we owed on 2009 bonds. We saved 8.6% of what we owed on 2009 bonds. we had. ”
The redemption is for outstanding bonds, Storrs said. There are no additional links beyond what is already pending, covering the construction of the Amarillo National Center as well as the northern area of the Amarillo Civic Center complex.
“The first responsibility of the host district is to pay the debt service on these bonds, and they have another set of bonds – these are the 2019 issues,” she said. “This is their first priority, paying the debt service on these two outstanding bonds.”
Storrs said this would extend the authorization of the 2% hotel occupancy tax for the term of the new obligations, going through 2052. The funds that come from this tax are used to fund monthly debt service payments. of the district.
However, if the hotel’s occupancy tax does not cover debt service payments, the city has pledged to cover any shortfall in monthly debt service payments, Storrs said.
“The city has never had to make monthly debt service payments, but the city reserves the amount equal to the annual debt service in its general fund as part of the annual budget process,” she said. declared. “The repayment will allow the city to extend this lease with the site district for the additional seven years, and the bonds will expire in 2052.”
Recently, Storrs said hotel occupancy taxes have risen significantly from the levels collections were at when the pandemic began. But, Storrs stressed that the levels are even higher than before the pandemic.
“On average, we collect around 11% more per month than collecting hotel occupancy tax before COVID, so the numbers 18-19,” she told the commissioner tribunal. “We expect this trend to continue. In fact, I hear it might increase as we go through the summer months, but we have put together a very conservative budget.
At the city council meeting, City Manager Jared Miller said this would affect Amarillo in a positive way.
“This is one item that is going to save us quite a bit of money over the life of this repayment,” Miller said.