Councilwoman Evans grills finance director

Tuesday, November 18, 2008 at 12:15am

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.

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By: idgaf on 12/31/69 at 6:00

Good for Evans and good for NCP for telling us about it.This is but another reason why we should forget about the one BILLION dollar Convention Center when we can't come up with 3 million with "management fees of 5 million. What kind of sense does that make? Pay 8 because we owe 3?

By: workerbee on 12/31/69 at 6:00

Good article, but it raises more questions than it answers… Was an answer ever given to the question of why no RFP was requested? In the back of my mind somewhere I thought these were revenue bonds, with fixed terms, rate and maturity. Did the change in terms happen overnight? You can't help but begin questioning the level of competence of support positions in Metro government (in both this and past administrations).

By: JeffF on 12/31/69 at 6:00

underwriters make money off of every bond issue, a lot of money. Accessing the Tennessee Municipal Bond Fund removes these costs and a few others from the cost of debt issuance. As in most states, municipalities can access the state bond fund without going through the RFP process. The issuing of new bonds (and the refinancing of old bonds) is a long drawn out process. Metro needed the money now, saw an available cost-attractive option, and saved us all a lot of money. Yes other cities have accesses the general bond market, but they were in process well before the crash and issued them just after the thaw. This sounds more like a person protecting her own industry's interests than those of Metro citizens. The normal bond selling procedure is not always the best option. BTW, I seriously doubt the $5 million management fee.

By: workerbee on 12/31/69 at 6:00

Silly me, you have to read the 11/14 article in this paper to fully understand the background to this article.Still wonder though.

By: nvestnbna on 12/31/69 at 6:00

"This sounds more like a person protecting her own industry's interests than those of Metro citizens. The normal bond selling procedure is not always the best option."My impression is CL Evans is trying to impress everyone with her knowledge of the Bond industry. At times, it seems like chest pounding and as Mr. Riebeling queried 'What's the point?' Of anyone up there, I probably trust Riebeling to be straight and although I disagree with Dean on several issues I don't think he's showering his friends with side deals. Certainly, he is relying on people he's had dealings and experience with in the past.I think this was a matter of the city getting caught in a very uncertain market and time and Riebeling made the best decision, he thought, at the time. Isn't it great to have these Monday morning quarterbacks come in with perfect 20/20 hindsight to impress us with their knowledge?