Arkansas City commissioners took steps this week they hope will help the city to refinance hospital debt and save taxpayers money.
The commission approved an ordinance Tuesday that requires 95 percent of revenue from the one-cent sales tax be set aside for bond payments.
City Manager Nick Hernandez said part of the reason for that action is to show potential investors that the city has a guaranteed source of income for repayment.
“This is a requirement that we need to undertake as a commission to assure bondholders and bond buyers that revenue will be made available to pay back those pledges,” he said.
The hospital opened 2011 with a $29 million construction debt, with an interest rate of 7 percent. The total debt with interest stands at nearly $40 million. The current terms require an annual payment of $1.9 million, with the debt paid off in 2038.
Commissioners hope to refinance the bonds in September. A reduction of the current interest rate could potentially save the hospital more than $500,000 per year in interest and shorten the term of the loan, officials have said.
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