The bonds in question were issued over a decade ago. In 2009, the owners of Greene Town Center approached the city of Beavercreek and Greene County, looking for ways to put in public improvements necessary for development, including improvements to public roads and signals.
One of the things they agreed upon was to sell $6 million in bonds to cover those improvements, paid back gradually by special assessment on the property, according to county administrator Brandon Huddleson.
Public entities can only issue bonds in the case of public infrastructure improvements, but can often get a much cheaper interest rate. However, in the wake of the Great Recession, the county had to borrow at the market rate, which was much higher. The bonds sold at 8% interest, the going rate at the time.
“It was an awful time to borrow money,” Huddleson said.
The refunding process, which the county approved Tuesday, dropped the interest rate from 8% to 3.85%, which translates to an annual savings of $100,000, and an estimated $1.5 million saved over the life of the bond.
“In order to refinance the bonds, the current bonds get paid off early. The current owners of the bonds at the high interest rate are now out of the deal. The county reissues the bond at lower interest rate, and new investors buy the bonds at the current public rate,” explained Alan Schaeffer, outside legal counsel for Olshan Properties. Schaeffer and his colleague David Montgomery represented Olshan, which owns the Greene, during the refunding process.
With a lower debt payment to make, developments like the Greene can attract new tenants and keep existing ones by having more flexibility in rent, and by investing in public amenity improvements, Schaeffer said. This translates to filling up empty storefronts, more choice for consumers, and more revenue for Greene County through sales tax.
“It’s simple economics,” county treasurer Kraig Hagler said. “We’re reducing expenses to the Greene and then in turn they can do what they want with that savings, whether that’s pave the parking lot, add landscaping, anything to make it more attractive to tenants.”
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