WHEELING - Wheeling City Council on Monday voted to refinance about $6.5 million in existing Tax Increment Financing debt.
The TIF debt is related to several downtown projects undertaken over the last decade, including the renovation of the Stone Center and the acquisition and demolition of buildings in the 1100 block of Main and Market streets. City Manager Robert Herron said three local banks are purchasing the debt, including WesBanco at 40 percent, Main Street Bank at 40 percent and Progressive at 20 percent.
Wheeling still owes about $6.5 million on previous bond issues in 2005 and 2011 totaling roughly $7.26 million. The sale of the bonds paid for the purchase and renovation of the Stone Center on Market Plaza and the demolition of several buildings in the 1100 block of Main and Market streets.
The bond ordinance cites "favorable market conditions" that present an opportunity for the city to reduce its interest costs. According to documents provided by the city, Wheeling's total cost to repay the new bonds over the next 20 years will be about $9.8 million, compared with $10.62 million under the original bond issues.
Under the old structure, the city would pay about $680,000 per year to retire the debt until 2024, when it would have been out from under the 2011 bonds and its annual repayment amount would have dropped to about $280,000 through 2033. The repayment schedule for the refinanced bonds calls for the city to pay about $518,000 each year through 2033.
Herron said restructuring the debt will free up about $392,000 each year the city can use to pay down other debt - including a $2.25 million Section 108 loan taken out to help bring Lowe's to Center Wheeling, on which Wheeling still owes about $1.38 million.
"The risk is with the bondholders," Herron said during Monday's related public hearing on the matter. No one spoke for or against the measure.
Tax increment financing is a tool that allows local governments to borrow money for development projects in a defined district, on the promise they will repay the debt with the proceeds from future gains in property tax revenue within that district. The total assessed value of property within the TIF district is $154.3 million, up from $100.8 million in 2003. The $53.5 million difference is what's known as the city's "increment," or the amount of increased valuation from which the city can use tax revenue to repay its TIF debt.
Since council approved the refinancing before the year's end, it won't count toward the city's 2014 $10 million limit for issuing tax-exempt bonds set by state code. Having the full amount available will provide flexibility in case a major development opportunity arises next year, he said.
Staff Writer Shelley Hanson contributed to this report.