Jones said the note is expected to have a 3.25% interest rate, which is a better rate than what the city could get via fixed-rate financing. The short-term note provides the city “a little flexibility” as it’s due in a year, he said. The city can pay off the note or pay off the interest and roll it for another year. They can do that for up to five years, but after three years, they must pay on the principal of the debt.
The projects the funds would support include:
The Criminal Justice Center: Hamilton has reserved $10 million of American Rescue Plan Act funds it’s received for the new justice center that would house the police department and municipal court. Public Safety Director Scott Scrimizzi said a firm number on the total cost of the justice center won’t be known until mid-October. Up to $30.5 million of the funds would be earmarked for this project.
The Tylersville Road reconstruction: From the city’s corporation limits to Gateway Avenue, which is 1.36 miles, this project would shore up the anticipated additional traffic volume (and the weight of trucks), as well as provide safer travel for traffic to and from Bypass Ohio 4. Where possible, the travel lanes will be widened to at least 13 feet. City funds would help fund the project, but up to $2.5 million of the note would be for this $3.6 million project.
Storm sewer: This work entails catch basins and storm sewers to support street paving activities. Storm sewer projects are on Millville Avenue, Tylersville Road, Milliken Street, the Five Points roundabout, and Progress Avenue. Up to $3.7 million of the note is earmarked for the storm sewer projects, though it’s expected to come under that total.
Wastewater: The wastewater projects include sanitary sewer lining and replacements, work at the Eden Park relief sewer and manhole replacements. Up to $3.3 million of the note is earmarked for the wastewater projects. Costs are expected to come under that total.
Hamilton City Manager Joshua Smith asked why is the BAN financing approach better than traditional financing, where there could be an amortized fixed rate over a set amount of years.
Jones said that based on the city’s A1 bond rating, they could see a 4% to 4.5% with traditional financing, and added the city’s financial advisor believes the short-term note is a better option.
“There is interest rate risk,” Jones said, but added, “the risk is right now. You’re facing high rates, and we expect rates to come down.”