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Medford roadwork bonds took advantage of low interest rates By MELISSA MARTIN Mail Tribune The city of Medford's recent sale of revenue bonds at a low lending rate could stretch street dollars further and save the city about $350,000 in interest expenses, city officials said. The $5 million bonds Medford sold this month will pay for fixing the bumpy Crater Lake and McAndrews intersection and building sidewalks on Poplar Street, among other projects. Asante project has positive side effects The sale of nearly $100 million in bonds by the city of Medford and Asante Health System this winter will create a secondary impact on the region's economy, a regional banker said. "Most of the work will be completed by local contractors and subcontractors, which would boost employment in a very important sector of the economy - construction," Joe Danelson, region president of U.S. Bank for the Southern Oregon/Northern California region. "It will also enhance our reputation as a regional medical hub." Selling bonds makes sense right now because of low interest rates, Rebecca Chao, president of Portland's Regional Financial Advisors, the city's financial advisor. "But no one should ever sell bonds that they can't afford - just like individuals shouldn't buy houses they can't afford just because mortgage rates are low," she said. "What we've been doing is internal financing - borrowing from our other funds," said Cory Crebbin, director of public works. "What we needed was to sell bonds at the perfect time. I think we came pretty close." Medford sold the 10-year bonds Dec. 6 and locked in a 3.89 rate, the lowest in 18 years, said finance director Larry Bryant. The city moved quickly to capture the lowest rates, selling its bonds through a competitive bid process over the Internet, said Rebecca Chao, president of Regional Financial Advisors in Portland. A local bank president said the city made a good business decision to extend the maturity on its debt. "A lot of people are eager to lock in long-term rates right now because there is a probability that long term rates could start edging up as we see further signs of economic strengthening," said Joe Danelson, region president of U.S. Bank for the Southern Oregon/Northern California region. U.S. Bancorp's Piper Jaffray handled the city's transaction. Medford sold bonds to pay for part of the city's $30 million list of 17 street projects, including Garfield's extension to Highway 99 and the $1.4 million North Phoenix Road link to Hillcrest, Crebbin said. The city of Medford also plans to sell $4.5 million more worth of bonds in January to purchase land for a sports park near Highway 99, Bryant said. The city's December sale may save Medford about $350,000 in interest payments, he said. The city pays interest every other month and principal annually using fees collected from developers. Medford last sold revenue bonds in 1999 - $9 million at a 4.3 percent interest rate - for the East McAndrews extension, Bryant said. Besides the city's own bond issues, Asante Health Systems plans to sell $90 million in 30-year bonds and the Rogue Valley Manor plans $75 million. Both will use the city's Hospital Facilities Authority to offer tax-free bonds. Asante plans to spend $75 million to remodel Rogue Valley Medical Center and $15 million for debt reduction, new equipment and other upgrades to its Medford and Grants Pass facilities. The Manor plans to refinance debt, including loans for the $26 million Skyline Plaza, said Kevin McLoughlin, administrator. Reach reporter Melissa Martin at 776-4497, or e-mail [email protected] Mail Tribune Home | Ottaway Newspapers, Inc. | Dow Jones & Co., Inc. | Privacy | Contact Us Copyright � 2001 Mail Tribune, Inc.