City Council votes to refinance Wellness bonds

Chris Wilcox
Staff writer

University officials are amid talks with the Murray City Council to refinance bonds on the Wellness Center.

The Murray Finance/Personnel Committee heard the proposal on March 8, from Murray State for a refunding bond issue to finance the facility.

The city council passed the motion on the first reading, another reading is set for March 22.

In 2002, the city financed the Wellness Center for $10 million. The brokerage firm Hilliard Lyons issued the bonds at a maturity of 30 years.

Murray State and the firm are proposing to refinance now because of lower interest rates.

Tom Denton, vice president of Finance and Administrative Services, said the University has undergone 10 years of the current arrangement and now wishes to refinance while the market is favorable.

The Board of Regents approved the amended lease agreement March 2. A representative of Hilliard Lyons spoke at the meeting and said the bond market allowed for a decrease in bond interest rates.

Denton said the refinancing would not change the duration of maturity but will instead save the University money.

Denton said cuts in Gov. Steve Beshear’s budget proposal that could leave the University with $3.3 million fewer pressured the University in a decision to keep the current student fees at the current rate.

President Randy Dunn said the reduced interest rate was a positive agreement the Universtity and city may obtain.

“That would free up some monies within our fee base to allow us to do renovations to the facility and that type of thing,” he said.

Greg Phillips, Hilliard Lyons senior vice president of Public Finance, said the firm and Murray State want to refinance at a lower interest rate saving the University nearly $80,000 a year.

“It is economically prudent to take action while the market is where it’s at,” Phillips said.

Alan Lanier, the city of Murray’s director of finance, said the goal of refinancing is to save the University $1.2 million to $1.8 million over the years left in the agreement.

If the city council agrees to the proposal, the original general obligation bonds will be purchased by the city and reissued with a lower applied interest rate.

The bonds will then go on sale March 27.

Lanier said he hopes the lower rates will encourage the University to reduce its membership rates for those in the community who use the center.

“By reissuing the bonds now, without extending the maturity date, the University is buying back the bonds with a maximum maturity of 30 years and issuing bonds with a maximum maturity of 20 years,” he said.

However, Dunn said he does not anticipate there being any charge decreases for students or other members of community. He said the rate adjustment will give Murray State the opportunity to save a little more money in a tough financial environment.