Metro Council will consider a resolution at its meeting next week to approve a $59 million loan agreement with the Clarksville Public Building Authority.
The loan agreement would refinance an adjustable-rate municipal bond issued in 2006 during Mayor Bill Purcell’s administration. The $59 million bond was originally issued in the 1990s to help finance what is now LP Field.
According to District 23 Council Councilwoman Emily Evans, Metro has never before borrowed from another municipality. The practice is not completely uncommon between smaller municipalities.
Adjustable-rate bonds carry the risk of an escalating interest rate. Metro does not hold any other adjustable-rate bonds.
During the initial phase of the global financial crisis earlier this year, Metro lost the credit rating on the bond and needed to find a new partner to issue the credit, Evans said.
However, if the loan agreement with Clarksville Public Building Authority is approved, an adjustable-rate bond would still be used to refinance the debt, which Evans said raises questions.
“It’s not clear to me, though, why we’re doing this,” Evans said. “I have a series of questions I’d like answered.”
Spending plan still on hold
In the meantime, Metro remains in a holding pattern on approving its capital spending plan. Typically passed in the summer months, Mayor Karl Dean’s administration delayed the spending plan indefinitely.
Metro Finance Director Rich Riebeling said the plan was still being worked on and could not offer a timetable for when it would be presented to Council.
The spending plan was delayed indefinitely after the unprecedented freezing of the municipal bond market earlier this year. Riebeling said the markets has thawed, but the number of projects were being carefully examined.
“It’s a work in progress,” Riebeling said. “Clearly [the amount of the capital budget] is not going up. We’re going to have to look at to see that everything is as big a priority as it was.”