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City lowers bonds’ interest rate
by Ashley Langston
Feb 01, 2012 | 838 views | 0 0 comments | 11 11 recommendations | email to a friend | print
PAROWAN – The city council officially voted last Thursday to amend the interest rate on the electric revenue bonds and settled a matter with resident Hal Platt regarding pressurized irrigation.

The city had previously been looking at refunding, or refinancing, its $4.033 million in electric bonds with another financial institution, but the current lender, Wells Fargo, offered it a better rate without the cost of refunding.

Terri Hartley, Wells Fargo vice president, said the terms of the city’s bonds would remain the same except the interest rate would go from 3.83 percent to 3.05 percent. The cost would be between $10,000 and $12,000, significantly less than a full refunding, she added.

Hartley said Wells Fargo likes Parowan and is proud to maintain a branch in the community.

Johnathan Ward of Zions Bank originally recommended the city look at refunding the bonds to get a lower interest rate and get out of some covenants in the current contract that he believed were undesirable. Hartley was asked by the council to explain the covenants.

She said one of the covenants would allow Wells Fargo, at the end of 10 years, to recall the bonds, and basically force the city to refinance, even if interest is high. However, that can only be done if the city’s credit becomes poor and the city is no longer healthy, which she doesn’t see as a risk for Parowan.

Additionally, the contract requires the city to maintain a certain debt coverage ratio, or basically to collect a certain amount each year in fees to be able to cover the debt payment and have some funds left over. She said she believes the ratio required is healthy and sees no reason the city would not keep those ratios. The city has been conservative in the past, she added.

Also at the meeting, the city and Platt resolved a pressurized irrigation issue. Originally, Platt purchased a piece of property and put pressurized irrigation to the property, with a large enough line to cover all the land. Years ago, he split his lot, selling half the property and building on the other half.

In the planning commission minutes, it reports that Platt did not have pressurized irrigation on the portion of the property he built on, and that the water went with the property he sold. However, city staff discovered recently that Platt had teed off the line and was using pressurized irrigation. Over all the years, however, he had not been paying for it in his utility bill.

At a December city council meeting, Platt said he was willing to pay for the water he had used over the years, but said he believed he should be able to have pressurized irrigation since the line he had originally put in was large enough for both properties. The city does not allow pressurized irrigation hookups because the system is maxed out and there are pressure problems.

Councilor Troy Houston said, in December, that Platt had known his lot did not have pressurized irrigation, because it had been stated in the planning commission meeting when he split his lot.

At last Thursday’s meeting, the council said Platt may not hook up to pressurized irrigation, because no one is allowed to, and discussed his payment for water used.

City Manager Shayne Scott said the city had come up with a number that was subjective and was less than it would have been had they totaled up all the months he was using the water and not paying. Platt said he would like to negotiate that number down, but Houston said he felt that either Platt could pay the set amount, or it could go to a criminal investigation and possibly go to court.

City Attorney Justin Wayment said whether Platt knew he was breaking the law or not, he was still subject to the penalty, giving an example of a driver being ticketed for speeding when he does not know the speed limit.

“I think it’s theft of services,” he said.

Platt said if that amount was the best he could get, he would pay it and would appreciate the city putting him on a payment plan. Scott said they would do that.

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