Melbourne’s Strong Financial Shape Yields Project Savings
By Space Coast Daily // November 19, 2012
City Values Favorable Bond Ratings
BREVARD COUNTY • MELBOURNE, FLORIDA – The city of Melbourne’s excellent financial shape has resulted in significant cost savings for new city projects.
Melbourne officials say that savings of more than $2.5-million has been achieved through the refinancing of long-term bonds that funded municipal improvement projects, a reflection of the financial health of the utility system that provides water and sewer services.
Ongoing work to improve utility system finances is reflected in highly favorable bond ratings from Moody’s and Fitch, the two national services that measure financial well-being, said Michele Ennis, the city’s director of finance.
The city recently borrowed $12-million at an interest rate of 3.3 percent, allowing the multi-million-dollar savings through refinancing of 30-year bonds which had been issued in 2002 at interest rates of 4 percent and 5 percent.
The new bond issue also provided about $5 million of new financing that is to be used on utility system improvement projects.
Further, the refinancing allowed the city to reclaim some of the added reserve deposits that it was forced to put in escrow during the financial market turmoil and the downgrading of the city’s bond insurer at that time.
“We have a strong, stable financial position in the utility system, and that allowed us to take advantage of the low interest rates,” Ennis said.
The utility system, which provides drinking water to a regional area, is funded by customer payments and is financially self-sufficient.
Water and sewer rates are set by the Melbourne City Council after receiving recommendations from consultants who calculate the revenue needed to maintain and operate the system.
Utility rates are not being increased in the current fiscal year.