The city of Morristown will issue up to $37.25 million in fixed-rate bonds to finance construction of the community center during the first or second full week of November, officials announced Tuesday.
Chris Bessler, city government’s financial advisor, estimates that city government will pay approximately 3 percent interest over the 30-year life of the bonds.
The bond sale will resemble an auction. Whichever bidder offers the best deal for the city will win the right to purchase the bonds.
The estimated cost of the community center, which will be built in West Morristown south of the Merchants Greene development, is $36.6 million. The 25-cent tax increase will be sufficient to retire the debt, city officials say.
If the bond issue is greater than the cost of the community center, the excess funds could be used for other projects, according to Morristown City Administrator Tony Cox.
Cox says fixed interest rates are at or near historic lows, and now is the best time in a long time to sell bonds for the community center construction.
“You’re not going to see these types of rates for long, and you’re not going to see them again,” Cox told councilmembers earlier.
Bessler says that in the future – perhaps 10 years into the 30-year term of the bonds – Morristown could have the opportunity to refinance the bonds at a lower interest rate. The interest rate on shorter-term bond issues is almost always lower, according to Bessler.
Bessler, senior vice president for Cumberland Securities in Knoxville, will also serve as county government’s financial advisor for the upcoming bond issue for jail construction and school upgrades, which will be significantly larger than the city bond issue for the community center.