Last week the City refinanced the $17.3 million debt on the City Hall and Library. City Treasurer Irwin Bornstein’s timing of the transaction should save $786,000 in future interest payments.
The bond deal was structured to front-load the savings over the next four years. The anticipated reduction in payments for the current fiscal year will be $388,531. The amount recouped in the next three years will be $122,857, $121,350 and $60,134, respectively.
The savings will help the budget problem slightly following $15 million in deficit spending over the past two years, which together with declining revenue has created a strain on the City’s budget.
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Good for Irwin. The savings this fiscal year resulting from his financial prowess just about makes up for the CITY COUNCIL MAJORITY’S IRRESPONSIBILITY in their decision to build and finance the Rose Parade float.
The City of Mission Viejo received rave reviews for a “savvy” sale of bonds for the library and city hall projects from the OC Metro magazine (which is notorious for promoting rather than objectively covering business). But the city still has $17.2 million in debt for state-of-the-art facilities far more lavish than virtually any other commercial facilities in town.
Compare this to Laguna Niguel, which has set aside funds for years to collect interest until it had enough for a new debt-free city hall and community center.
Compare Mission Viejo to the City of Laguna Hills, which purchased and renovated an existing office building for its city hall, with enough space left over to rent out to help defray city hall operating expenses. Mission Viejo conducted a push-pull survey which exaggerated costs for purchasing the office building where the city had been leasing and renting out remaining space like Laguna Hills did. The survey made building the lavish new city hall sound like a bargain. We are still paying off that “bargain” a decade later.
Compare Mission Viejo to the City of Lake Forest, which is embarking on a city hall-civic center-athletic field project financed entirely through reserves and developer fees from a future housing project.