Asheville City Council takes step to spread bond costs over longer term at lower rate

Word bonds spelled out with scrabble letters


On Nov. 8, 2016, Asheville voters approved three bond referendums: $32 million for transportation projects, $25 million for affordable housing projects and $17 million for Parks projects.


Since the inception of the bond program, City of Asheville projects have including enhancements such as resurfaced streets and sidewalks; investments in affordable housing; and improvements to parks, including restrooms at Jake Rusher Park and a new playground at the Tempie Avery Montford Center Complex. To date, the City has spent about $23 million of the $74 million authorized by the voters. 


To get the bond projects launched, the City borrowed money using a construction-finance model where project costs are funded initially through variable short-term financing (in this case, a Bond Anticipation Note (BAN), and 20-year bonds that are issued every two-three years.  Now the City is taking the next step by refinancing the short-term BAN for a lower long-term rate. To do that, the City is preparing to issue the first of the General Obligation bonds in February.


The City’s model for financing projects is fiscally sound and designed to save money over the long term. 


Council action was needed to set this financial move into motion. At their Dec. 10 meeting, City Council passed a resolution setting a Jan. 14 public hearing on the proposed General Obligation Refunding Bond financing for the refinancing of existing debt; and the introduction of a Bond Order authorizing the issuance of General Obligation Refunding Bonds related to the 2016 Bond Referendum. Here is a link to the staff report and resolution.


“This is exciting! It’s the first time the City has issued General Obligation Bonds in more than 20 years,” said Asheville Chief Financial Officer Barbara Whitehorn. “We have issued other kinds of bonds, but these voter-approved bonds are helping us to accomplish more of the projects important to the community.”


This action spreads capital costs over a longer term and as a practice is aligned with the Council goal of being a financially resilient City.