City eyes multi-million dollar projects

    The city of Washington?s purchase of 126 acres west of Elm Grove Cemetery in August was a long time coming. In the summer of 2009, the city council passed a $3.5 million general obligation bond, which was to use property taxes to pay for that property acquisition and for a new water tower.

    City Administrator Dave Plyman said the city needs the land west of the cemetery to build a new sewer plant and to expand the cemetery. He said the sewer plant project is now a little behind schedule.

    ?We were hoping to have the letting on the new sewer plant this summer,? said Plyman, who said that the letting will now be delayed until early 2011.

    The $3.5 million bond is scheduled to be repaid over a period of 20 years. Plyman said the city is not borrowing the money from a single bank. 

     ?A number of banks and other financial institutions bid on the bond,? he said. ?The bond is then broken apart, and parts of it are sold to individual investors.?

    Plyman said the city was interested in finding the lowest interest rate the market would provide. The interest rate the city will pay on this bond is 1.25 to 4.8 percent, depending on the year the bond is paid off. He said the average interest is about 3.5 percent.

    ?That was a great deal, and is still a great deal even now,? he remarked. ?Money has never been this cheap. Even mortgages are now pretty cheap, but there are more qualifications to meet for borrowing money.?

    One reason the city got such a good deal on interest rates is that the interest paid to investors on general obligation bonds is exempt from federal taxes. Plyman said that this leads to lower interest rates from lending institutions.  

    It?s not just lending firms that have slashed their prices in this economy. Plyman said the city can expect to spend less than anticipated on building projects because construction companies are in very tough competition with one another.

For the full story, see the Sept. 22 edition of The Washington Evening Journal