City and library sell 2015 library bonds

Sale will save library almost $4 million

By: Kayla Dimick | Southfield Sun | Published March 12, 2015

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SOUTHFIELD — Through the recent sale of its 2015 Library Building Authority refunding bonds, the city of Southfield will save almost $4 million over the next 15 years.

The bonds, which were related to the original construction of the library, were sold in the amount of $21,765,000. The bonds were refinanced at an average lower interest rate of 2.86 percent, as compared to the original rate of 5.04 percent, which will save the library almost $4 million over the next 15 years, with a final maturity of 2030.

“We’re making every effort we can to cut expenses to save taxpayer dollars,” City Treasurer Irv Lowenberg said. “One of the largest hurdles for the library is the cost of the building, the structure.”

The term-length of bonds were not extended, Lowenberg said, so the debts will be paid off in the same amount of time as they would be before the refinancing.

“Sometimes the government spreads debt over a longer time period,” Lowenberg explained.

City Librarian David Ewick said the refinancing was a way to battle the library’s current financial crisis.

“The library has been looking for ways to reduce our expenses and increase our revenues to fight the financial crisis that hit us, so we’ve done several things, and one of the things we identified was that interest rates had dropped so much that when it became possible to refinance the bonds for the building, it made perfect sense to do so,” Ewick said.

In 2011, the budget for the library was cut, leaving officials with the task of cutting hours, programs and salaries. Hours were reduced by 30 percent, Ewick said in an earlier report.

Southfield overwhelmingly approved a 4.9183 mill tax increase in May 2011, awarding $1.1 million in funds to the Southfield Public Library and balancing the 2011-12 budget. With revenues down 30 percent from the peak year of 2008, though, Ewick said, the numbers still sank for them. Not being able to operate with the $7.84 million budget, they dipped into the $4.8 million fund balance to the tune of $708,270 to compensate for a shortfall in 2012.

Although the refinancing of the bonds will save the city and library a lot of money, Ewick said they aren’t out of the woods yet.

“$4 million is a wonderful thing,” Ewick said. “One thing I do want to point out is that this doesn’t take us out of our crisis completely. We are still not able to balance our budget.”

However, through the refinancing, Ewick and Lowenberg said there is a possibility that hours could increase.

“This allows (the library) to revisit the opportunity to increase hours and  increasing benefits for the residents and visitors to enhance operations, to get it back to the library everybody loves,” Lowenberg said.

The financing was conducted by the Michigan investment banking office of the brokerage firms Fifth Third Securities, and Stifel, Nicolaus & Co.,  as well as the financial advising firm Public Financial Management and the law firm serving as bond counsel, Miller, Canfield, Paddock and Stone, P.L.C.

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