Arkansas side discusses refinancing bonds

After much discussion, the Texarkana, Ark., Board of Directors voted to choose Stephens Inc. to refinance their Franchise Fee Secured Capital Improvement Revenue Bonds, Series 2010. All directors voted for the proposal except Mayor Ruth Penney-Bell and Ward 2 Director Laney Harris. PenneyBell said she didn’t think it made sense for the board to go with Stephens as the company will charge the city about $15,000 more throughout the process.

“If we don’t accept the (Request for Proposal) from the lower firm, we will be the losers because we will keep what we always had and there won’t be any new blood,” she said.

Stephens Inc. proposed to refinance the bonds for $3.775 million, including issuance fees and underwriter’s discount, but Crews and Associates has given a refinance proposal for $3.76 million, inclusive of the same fees and discount. Finance Director TyRhonda Henderson and Acting City Manager Dr. Kenny Haskin said in agenda materials and at the meeting that is why they recommended Crews and Associates.

“The more money we can save gives us a chance to help the city’s budget,” she said.

Penney-Bell said the process was flawed from the beginning because former City Manager Harold Boldt shared the Crews and Associates numbers with Stephens this past February, allowing them to come in lower when the request for proposals was sent out.

Before the vote, David Peavy, a Texarkana, Ark., citizen, said he cautioned directors about how their vote would look to other companies who might want to do business with the city.

“You all have said this was not done exactly right,” Peavy said. “When you put a proposal out and don’t accept the low proposal, you lose credibility.”

Ward 3 Director Tim Johnson said he voted for Stephens because he appreciated the firm coming to the city originally to suggest the bonds should be refinanced. The firm has been doing business with the city more than a decade.

“The number of hours they had invested with the city was another reason I voted for Stephens,” Johnson said. “They came to us first.”

The agenda summary said the estimated savings of contracting with Crews and Associates in order to refinance the bonds would be approximately $689,00 over the life of the bonds. However, Ward 1 Director Allan Wren and other asked if that number was concrete and representatives from both firms said interest rates that determine bonds fluctuate each day and there are no guarantees.