Myrtle Beach could save $4.2 million with new bonds, city says

The city of Myrtle Beach could save $315,000 a year as it reissues bonds used for the development of old air force base land.

On Tuesday, city council passed first reading of an ordinance that would allow the city to replace its outstanding debt — about $40.13 million — with new bonds at a lower rate. In some cases, the new bonds could be issued at half the rate of some older securities, Myrtle Beach Chief Financial Officer Mike Shelton said.

“We’re in a situation with the current bond market in which we think we’re able to refund that old debt for better rates,” Shelton said.

Money raised from bonds issued in 2006 was used to build infrastructure like water and sewer lines and landscaping, city officials said. Those basic investments were necessary to enable later development, like The Market Common and other housing developments in the area.

Another series of bonds from 2010 helped finance Grand Park.

Total savings as the city reissues bonds for all the old debt could reach $4.2 million, Shelton told city council Tuesday. The bonds’ final maturity date, which will not be changed when the city issues the lower-interest-rate debt, is in 2035.

“We get that question [on maturity] from constituents that don’t quite understand or grasp the mechanics here,” Councilman Phil Render said at the council’s Tuesday morning workshop. “We’re not extending the length of the payments, we’re through market conditions capturing more efficient yearly payouts.”

The reissued bonds will be paid out with property taxes from homes and businesses on the Air Force base land. Shelton said that the city froze the revenue it took from the land for other purposes in 2004, and now, any money from residences or commercial properties built since then, in addition to any additional tax revenue from properties that existed at the time, pay back the bonds. Just over $9.5 million in bonds have been paid back by the city.

When several military installations were closed in the 90s, Shelton said the state gave municipalities this financial flexibility to redevelop the land.

“The legislature, at that time, adopted special statutes to provide for using tax increment financing as a way to finance the redevelopment of these former military installations,” Shelton said.

This story was originally published August 24, 2016 at 4:11 PM with the headline "Myrtle Beach could save $4.2 million with new bonds, city says."