District 23 Councilwoman Emily Evans pressed Metro Finance Director Richard Riebeling about his decision to refinance $59 million in municipal bonds during an uncomfortable Council budget and finance committee hearing on Monday.
Evans, who has a background in underwriting municipal bonds, questioned Riebeling about refinancing the bonds through the Tennessee Municipal Bond Fund, by way of the Clarksville Public Building Authority.
A visibly tense Riebeling disagreed with Evans on several lines of questioning, but mostly handled her back-and-forth.
Toward the end of Evans’ questioning, she asked Riebeling how Metro’s credit rating stacked up against smaller Tennessee municipalities, which she said have accessed the recently thawed credit markets. At one point during the exchange, Riebeling snapped at Evans, ‘What is the point, Council lady?’
Evans asked Riebeling about the management fees Metro would owe over the life of the loan, which she estimated to reach in the neighborhood of $5 million.
Riebeling reiterated his stance that the Tennessee Municipal Bond Fund was the best option to refinance the bonds, after the German bank that extended Metro the credit was downgraded in September.
That changed the bonds to bank bonds and dropped the repayment schedule from 18 years down to seven years. Riebeling said Metro was pressed for time in order to avoid a $3 million payment, which was due Nov. 20.
But, Evans wanted to know why Riebeling didn’t use a standard Request For Proposal (RFP) in addition to why Metro didn’t sidestep the Tennessee Municipal Bond Fund and go straight to the lender (in this case Bank of America).
Evans concluded her tense line of questioning by pointing out smaller municipalities like Collierville had accessed the credit markets in the last seven days. Riebeling had previously stated that using the Tennessee Municipal Bond Fund was the best option in the short amount of time.
“I think it’s the best deal we could get in this time frame,” Riebeling said, adding that the $3 million payment was deferred until December, meaning Metro could avoid the payment if the resolution is passed.
The budget and finance committee unanimously voted to approve the resolution.
The $59 million were originally issued for projects related to what is now LP Field in the 1990s. The bonds were refinanced in 2006 during Mayor Bill Purcell’s administration.