SOUTH BEND — The city of South Bend received $1.9 million last week from the refunding of tax increment finance bonds issued through the Indiana Bond Bank, or IBB, state Treasurer Richard Mourdock announced Thursday.
In 2003, the IBB bought $34 million of South Bend TIF bonds at an interest rate of about 4.65 percent. Because of the dramatic decline in interest rates over the past few years, the IBB was in a position to refinance its bonds.
The refund represents cash up front on future savings, city controller Mark Neal said Thursday. As such, the city will continue to pay on the bonds as if the old interest rate still applied.
In the meantime, the refunded money has been deposited into the Airport ($700,000) and Downtown ($1.2 million) TIF accounts, Neal said. No decision has been made about what to do with it.
That said, the money can not be used to make advanced payments on the bonds, according to Don Inks, the city’s director of economic development.
“I don’t think there’s a way to do that,” he said. “These bonds have fixed payment schedules. You can send the money to the trustee, but he really can’t apply it until the payments become due to the bond holders.”
The city issued the bonds to finance economic development projects in the two TIF districts, Inks said, including, but not limited to, the new Studebaker National Museum, Key Bank Plaza, Island Park, Coveleski Stadium, and the former Rink Riverside Printing site.
As part of a lease agreement with the new owner of the Silver Hawks, the city has committed to spending another $1.75 million on the Cove in preparation of the upcoming baseball season.
“This is a great example of how we can find new ways for the city to save money in tight times,” South Bend Mayor Pete Buttigieg said of the bond refund. “I want to applaud the Indiana Bond Bank and our finance staff for the creative problem solving and good stewardship that led to $1.9 million in taxpayer dollars saved.”
The state established the IBB in 1984 to assist local Indiana communities with the issuance of debt. It is overseen by the state treasurer.
Staff writer Erin Blasko:
