The idea of using local banks to finance local projects isn't entirely new. Last December, a group of local banks, led by
Because involvement of the local banks worked well in the
"We saw how well this worked for (the
Okins said he talked to an individual at a local institution to see if the bank would be interested. Okins said the bank seemed very interested in trying to be a community leader and participate.
Further discussions with the banks are also involving
Now, Aho will be coordinating with local lenders.
"We've had initial discussion with the local institutions. But now we're working through Kathy as our representative to work out the details,'' said Okins.
Aho said she's seen local lenders finance local street projects in a number places, although it's not real common. She said it all depends on the local institutions, what funds they have, and if the local rate is competitive with what the issuer can otherwise get in the marketplace.
"The municipal market works really well and it's very competitive,'' said Aho. "Sometimes it's an issue of rates. In the past they've had more investment alternatives that might have given them a higher yield than a tax-exempt general obligation bond, which is usually what this type of financing is.''
Okins told the
Okins told the committee that the city "would offer it to whoever wanted to participate.'' But he said one bank has indicated it would be willing to step up and finance the whole package if others were not willing to participate.
Committee members agreed that staff should continue to pursue these local financing alternatives and make a recommendation to the committee.
Aho said using local lenders has several benefits. For one, the city can avoid the cost of a bond rating by a national rating agency because local lenders are already familiar with the city compared with outside lenders who may not have that familiarity. Also, there's more local ownership, and the local lender or lenders receive a public relations boost.
"I think that it is a nice collaboration between the city and the local banks,'' Aho said. "I am kind of a buy-local-if-you-can kind of person, if all other factors are equal. I think that's nice to support those entities in your community and we can determine if the pricing is right. Then it just makes it a win-win situation. It's easier, more streamlined for the city. It can potentially save a little bit of money and then it keeps some business local.''
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