Six months ago, Portsmouth City Council voted to move $4 million out of the city’s general fund to help finish the renovation of the old Fifth Third Bank building, which is being transformed into the city’s new administrative headquarters.
That vote raised eyebrows at the time. Several residents and even some council members worried that pulling that much money from the general fund could hurt other departments that rely on it.
City Auditor Trent Williams quickly reassured the public that the move was temporary. The plan, he explained, was for the city to issue municipal bonds—basically, loans that investors buy from the city—to replace the money.
Williams said the final renovation costs could end up being as low as $1 million, but that it was smarter to prepare for the full $4 million to $4.5 million range “just in case.”
What the Bond Ordinance Does
Under the ordinance now before council, Portsmouth would sell up to $4.5 million in City Building Improvement Bonds to investors. The money would cover the remaining renovation expenses and the costs of issuing the bonds—things like printing, legal fees, and paying a financial agent to manage the sale.
The bonds could run for as long as 30 years, maturing no later than December 1, 2055. Investors would earn interest every six months, and the city has the option to pay them off early if it makes financial sense.
The bonds will be backed by the full faith and credit of the City of Portsmouth, meaning property taxes could be used to make payments if necessary. However, city leaders expect regular city revenue to cover the debt.
How It Works
Conners & Co., Inc. will handle selling the bonds, which must sell for at least 97 percent of their total value. Once sold, the proceeds will be placed in a special fund dedicated solely to the city building project.
The ordinance also spells out that the bonds will be tax-exempt, making them attractive to investors who want safe returns without paying federal income tax on the interest.
Dinsmore & Shohl LLP, a Cincinnati-based law firm, has been hired as bond counsel to make sure the city follows all state and federal rules.
Why the Rush
Council declared the ordinance an emergency measure, meaning it takes effect immediately after passage. The reason: city officials want to secure a favorable interest rate before rates rise any further.
The move allows the city to finish its long-awaited relocation into the former Fifth Third building and gives Portsmouth a centralized, updated home for city services without permanently draining the general fund.
