WHEELING-Wheeling City Council will vote today on a proposal to refinance about $6.5 million in outstanding Tax Increment Financing debt in an effort to lower its interest costs over the next two decades.
The refinancing plan is the only item on the agenda for the special council meeting which will open with a public hearing at noon on the second floor of the City-County Building.
Wheeling still owes about $6.5 million on previous bond issues in 2005 and 2011 totaling roughly $7.26 million. The sale of those bonds has paid for such projects as the purchase and renovation of the Stone Center on Market Plaza and the demolition of several buildings in the 1100 block of Main and Market streets.
The bond ordinance cites "favorable market conditions" that present an opportunity for the city to reduce its interest costs. According to documents provided by the city, Wheeling's total debt service over the next 20 years under the current arrangement would be about $10.62 million, compared to a projected $10.22 million if the city refinances.
Either way, Wheeling will be paying off its TIF debt until 2033, 30 years after the city first established its TIF district in 2003.
Under the current structure, the city would pay about $680,000 per year to retire the debt until 2024, when it would have been out from under the 2011 bonds and its annual repayment amount would have dropped to about $280,000 through 2033.
The repayment schedule for the proposed refinanced bonds calls for the city to pay about $518,000 each year through 2033.
According to City Manager Robert Herron, restructuring the debt will free up about $392,000 each year the city can use to pay down other debt, including a $2.25 million Section 108 loan taken out to help bring Lowe's to Center Wheeling, on which Wheeling still owes about $1.38 million.
Tax increment financing is a tool that allows local governments to borrow money for development projects in a defined district, on the promise they will repay the debt with the proceeds from future gains in property tax revenue within that district. The total assessed value of property within the TIF district is $154.3 million, up from $100.8 million in 2003. The $53.5 million difference is what's known as the city's "increment," or the amount of increased valuation from which the city can use tax revenue to repay its TIF debt.
Herron said timing was the reason a special meeting was called. If council approves the refinancing before year's end, it won't count toward the city's 2014 $10 million limit for issuing tax-exempt bonds set by state code. Having the full amount available will provide flexibility in case a major development opportunity arises next year, he said.