Columbia Council authorizes bond issue of up to $10 million

November 24, 1993|By Adam Sachs | Adam Sachs,Staff Writer

The Columbia Council last night authorized the Columbia Association to issue up to $10 million in bonds to pay for capital projects and to do it soon while interest rates are favorable.

The council also stipulated that the interest rate for the bond issue be 7.5 percent or less.

The association sold $5 million in bonds at 8.8 percent interest in fiscal 1993. Interest rates for bond issues during the 1980s ranged from 11 percent to 18.6 percent.

The council also voted down a proposal asking the association to prepare a budget option for next year that reflects a 1.5-cent reduction in the association's annual property charge of 73 cents per $100 of assessed value.

Proceeds from the bond issue will be used to pay for projects this fiscal year, which ends April 30, and for fiscal 1995, said Bob Krawczak, the association's financial director. One of the projects is the Fairway Hills Golf Course, estimated to cost $5.2 million.

He said about $1.2 million would go toward the purchase of Skateland, and about $1 million each would be set aside for two new swimming pools being considered for River Hill and Long Reach villages.

The association purchased Skateland, which was a privately owned roller-skating facility, in 1989 with the agreement that the bulk of the purchase price would be paid in 1995.

The private, nonprofit association, which runs the unincorporated city's recreational facilities and community programs and maintains open space areas, has about $80 million in outstanding debt.

Councilman David Berson, an economist with the Federal National Mortgage Association (Fannie Mae), advised the association to make the transaction soon because interest rates likely will rise as November's relatively strong national employment report is released.

Council members Chuck Rees and Norma Rose voted against the bond sale resolution. Ms. Rose said she "has a problem with the amount" because the bulk of the money will go toward the golf course project.

Mr. Rees said he wants to look further into refinancing the association's outstanding debt, even though the association's bond counsel has advised that it can't be accomplished under terms of previous bond sales.

In a discussion of budget initiatives for fiscal 1995, several council members said it would be "misleading" or lead to "false hopes" to direct the association to prepare a sample budget showing an assessment rate reduction. Other ideas offered last night involved expanding services or programs, such as summer camps and swimming instruction, which could result in increased costs.

"So far tonight, we've included several additions in the budget with other options for additions," said Vice Chairwoman Fran Wishnick. "It's probably not possible to reduce the assessment unless we define significant service reductions."

Chairwoman Karen Kuecker concurred, saying association managers "got beat up pretty badly" the last time the council directed them to come up with ways to increase income or cut costs. An assessment rate reduction shouldn't be considered "when we're trying to increase services and give a good quality product," she said.

Three members -- Mr. Berson, Mr. Rees and Mike Rethman, by proxy -- voted for the proposal.

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