The Ohio Communities Accelerator Fund, set up by the Warren County Port Authority, helps to lower interest rates by combining resources, said the officials who manage the fund.
In the long run, the public and business community in Warren County and beyond will benefit from development enabled by the fund, Martin Russell, deputy county administrator and executive director of the port authority, said last week.
Earlier this month, the fund refinanced $3.6 million of outstanding debt issued by the port authority for roads and other public improvements made for the Premium Outlets Mall, just inside the Warren County Line, on Ohio 63 at Interstate 75.
It was the fifth deal for the fund, created in March, and the latest to offer lower interest rates to the borrower on existing debt.
Sometime next year, officials anticipate closing their 10th deal, and that would qualify the new fund for public rating by firms such as Moody’s and Standard & Poor’s. That will deepen the pool of potential investors for future projects, Russell said.
“Before they give you a rating, they want to see that you are viable,” he said.
Since June, the fund has:
- refinanced half of $15 million issued for development of the Warren County Sport Park at Union Village;
- refinanced $1.4 million of debt issued by Warren County for roads and other infrastructure for the Miami Valley Gaming racino development;
- refinanced $8.5 million of debt previously issued by the Village of South Lebanon for public improvements around the Rivers Crossing development at I-71 and Ohio 48;
- issued just under $2.7 million in revenue bonds for new development on Ohio 63, west of the racino;
- refinanced $3.6 million of outstanding debt previously issued by authority for public improvements around the outlets mall.
About eight public bond funds are in place now in Ohio, according to Bell, chair of Bricker & Eckler’s public finance practice group.
The first, the Ohio Enterprise Bond Fund, is operated by the state. Others have since been established in Toledo, Cleveland, Akron, Dayton, Cincinnati and Columbus, Bell said.
“Bond funds have a long, stable history,” Bell said.
How they work
In addition to lowering interest rates, public bond funds typically finance debt over longer periods, as much as 30 years, Bell said. They enables debtors to keep more of their debt off their balance sheets, freeing up their borrowing power for other projects, he said.
The Warren County Port Authority decided to set up the fund after other public bond funds in the region — including the Hamilton County Port Authority — turned down appeals for financing, Russell said.
“If we are not going to get the service from the funds around us, can we do it ourselves?” Russell said.
Gail Paul, vice president of communications strategy for the Hamilton County Port Authority, said Russell’s inquiry was preliminary and lacked specific facts, including what project was to be funded.
“We’re not aware of Warren County’s desire to be part of our bond fund,” Paul said Thursday.
The Warren County Port Authority started the fund with $1 million in cash reserves and a letter of credit from Key Bank, according to Russell and Matthew Schnipke, authority deputy director and director of economic development in Warren County.
“It was just a better way to put those funds to use,” Schnipke said.
With each deal, the fund’s collateral grows.
The fund is expected to help local governments unable to finance projects themselves, Russell said.
In coming weeks, the fund is to finance a regional sewer plant upgrade. The plant serves Franklin, Carlisle and Germantown.
Russell likened the fund to a parent co-signing for a child’s first car.
“On your own, the bank won’t look at you,” Russell said. “Now all of a sudden you are marketable.”
In addition, Russell said he hoped to help companies wanting to expand or retrofit their facilities with energy-efficient materials through the fund.
The authority, which has already assisted in developments outside the county, expects to use the fund elsewhere in the state, Russell said.
“The project still has to stand on its merits,” he said.
About the Author
