CONCORD -- City leaders plan to refinance old redevelopment agency debt to take advantage of low interest rates.
The former redevelopment agency owes about $5.2 million for bonds it issued in 2001 to build the Concord Avenue parking garage and about $41 million for 2004 bonds dedicated to the central Concord redevelopment project.
Under a bill the Legislature passed two years ago, successor agencies may refinance bonds as long as there are savings.
"These bonds can currently be called and refunded without penalty, and the current environment makes it feasible for us to move forward," Karan Reid, director of finance, told the City Council recently.
Currently, the average interest rate between all of the bonds is about 5 percent, according to Reid.
Refinancing is expected to save a total of about $4.5 million over the remaining 10-year life of the bonds or an average of $360,000 per year. All of the taxing agencies -- including the county, Contra Costa Fire, East Bay Regional Park District and Concord -- will share the savings.
The city would receive about 10 percent of the savings or about $36,000 per year on average over the 10-year repayment period, according to Reid.
Bonds issued by the former redevelopment agency are repaid with a portion of the property tax revenue generated by the redevelopment project areas.
City Manager Valerie Barone stressed that the projected savings won't be a new revenue stream for Concord.
"The revenue the city gets comes from having to pay less revenue to pay off the bonds. All of the property tax entities will see an increase in the property tax they receive," Barone said. "It's not a revenue stream that's new coming to us; it's just that there will be more property tax coming to us in the redevelopment (project) areas after these bonds are refinanced."
Homeowners, however, should not expect a lower tax bill.
"Somebody won't see their property tax go down because we're refinancing these bonds," Reid said.
On June 24, the council, acting as itself and as the successor agency, authorized the issuance and sale of tax allocation refunding bonds. On July 1, the city submitted the legal documents to the state Department of Finance, which has up to 65 days to review the paperwork and approve the refinancing. The city will secure a rating for the bonds from one of the credit-rating agencies. The successor agency and the council are scheduled to approve the financing documents in September with the goal of going to market in October.
Lisa P. White covers Concord and Pleasant Hill. Contact her at 925-943-8011. Follow her at Twitter.com/lisa_p_white.