As construction work continues on the Soldotna Field House, the Soldotna City Council on Wednesday, Aug. 28, approved an arrangement to issue a general obligation bond anticipation note, likened by City Manager Janette Bower to a line of credit, to Northrim Bank.
That move, Bower told the city council during their Aug. 28 meeting, comes as the city has issued a bond for $10 million of the $15 million approved by voters to fund construction of the field house. Looking at the remaining $5 million, Bower said the anticipation note can be used to avoid bonding more funds than are needed for the project.
“We don’t want to take out all of it, if we don’t need all of it,” Bower said. “This allows us to have this line of credit, use the funding we need, and then when the project is done to pay for the line of credit with the bond. It does not change the voter approved bond debt at all.”
The city put out a request for proposals, Bower said, and of three respondents, Northrim Bank was recommended after scoring by the city’s finance department. A resolution passed by the city authorized the issuance of the anticipation note, and Northrim Funding Branch Manager Steve Manley said that the bank had already underwritten the agreement and was prepared to go forward with it.
Per the resolution, the bank offered a line of credit to the city with a 4.82% per year interest rate. The city can draw upon it as needed, up to an amount of $5 million — matching the amount remaining that can be bonded.
The described interest rate, Manley told the council, was developed internally to be competitive in responding to the request for proposals. It is “in the ballpark” compared to other examples of tax exempt financing, he said.
“Our rate proposed had to do with our interest in being a part of this project.”
Before the resolution was passed, it was amended by unanimous consent in multiple sections. Bower said that the changes were “clarifying in nature,” revising the resolution to match the terms of the agreement as awarded.
“This is a very wise, conservative approach to doing this,” council member Dan Nelson said during the meeting. “I don’t know if this is particularly unique, but I don’t think we’ve done it in the time I’ve been here. I appreciate this instrument going forward.”
The council adopted the amended resolution with a unanimous vote in favor.
Bower said that though the field house construction is finally “going vertical,” with walls and part of the roof support now visible at the site, the city doesn’t know for sure when the building will be complete and open.
“I will keep you posted,” she said to the council.
A full recording of the meeting, the resolution, and Northrim Bank’s response to the request for proposal can all be found at soldotna.org.
Reach reporter Jake Dye at jacob.dye@peninsulaclarion.com.
