Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, October 19, 1993 TAG: 9310190246
SECTION: VIRGINIA PAGE: C-3 EDITION: METRO
SOURCE: JOEL TURNER STAFF WRITER
DATELINE: LENGTH: Medium
The new debt would finance improvements to schools, parks, bridges, streets, storm drains and other projects.
City Manager Bob Herbert has said it's possible the bonds could also raise money to provide more parking at the Roanoke Civic Center to ease congestion there.
Herbert and his staff are preparing a five-year capital improvement plan that would be financed with bonds. The specific projects have not been publicly identified.
Because of the low interest rates now available and the city's paying off earlier bond issues, officials said Roanoke can issue an additional $20 million without a tax increase.
"The normal reduction in payments on old bond issues will free up money that we could use to finance new bonds," said James Grisso, the city's finance director.
There will be a substantial drop in Roanoke's bond payments beginning in 1995 as older debt is paid off, Grisso said.
Interest rates on municipal bonds are now the lowest they've been in many years. Grisso believes the city could sell bonds now at a rate below 6 percent.
The $20 million question is expected to be put to city voters in a referendum, although City Council can sell bonds without voter approval.
Bonds are loans. The city borrows the money in the financial markets and repays the people who buy the bonds over 15, 20 or 30 years, depending on the terms of the deal.
The $35 million issue, which will be sold either late this year or early next year, will provide $13 million for the Hotel Roanoke Conference Center and $7 million for a jail annex and expansion of the city's juvenile detention home. The conference center debt will be repaid with sales taxes and other revenue from the project.
The money for the jail annex and juvenile detention home will be repaid with an increase in the motor vehicle license fee from $15 to $20 and an increase in the cigarette tax from 14 to 17 cents a pack.
Council approved the bond issue for the conference center, jail and juvenile detention home without a referendum.
The city also hopes to raise $15 million to pay for its share of the cost of expanding the regional sewage treatment plant and replacing several sewer lines with the $35 million debt package.
The sewer debt would be paid for with higher sewer rates over the next three years. The average customer's monthly charge would gradually increase from $6.47 to $9.80 by 1996. Rates would also rise for commercial and industrial customers.
Even with borrowing this $55 million, the city will remain far below its debt limit of $300 million.
Currently, the city's bonded debt is $88 million. This includes $30 million for improvements to the water system and $8 million for parking facilities, which is being repaid with special fees and charges.
State law permits cities to issue bonds equal to 10 percent of the assessed value of real estate within their boundaries. The assessed value of real estate in Roanoke is $3 billion.
The water and parking bonds don't count against the city's debt limit because "they are supported with revenues other than general-fund taxes," Grisso said.
Council raised water rates to pay off the water debt, and higher fees will repay the parking debt.
\ $55 MILLION IN DEBT\ WHERE'S ALL THAT MONEY GOING?\ \ Projects in the $35 million bond issue:
$15 million, sewage treatment plant expansion and new sewer lines.
$13 million, Hotel Roanoke Conference Center.
$7 million, jail and juvenile detention home expansion.
\ Projects in the $20 million bond issue:
Specific projects have not been publicly identified, but are expected to include schools, storm drains, bridges and parks.
Funds may be earmarked to cover a $656,000 increase in the estimated $7 million cost for the jail annex because of changes in state regulations for jails.
Funds may also be raised for more parking at the Roanoke Civic Center.
by CNB