The City of University Place has refinanced debt owed on its Town Center mixed-use project, allowing the city to avoid making a payment it couldn’t afford.
The city was rescheduled to make a $12.4 million principal payment on a portion of the Town Center debt by December 2013; the refinancing breaks that payment into installments over 25 years. State auditors had concluded UP didn’t have the money to make next year’s balloon payment.
Also Wednesday, UP refinanced $1.8 million it owes on debt issued to develop Cirque Park to take advantage of lower interest rates. The Cirque Park debt will be retired in nine years.
The city has been making annual interest-only payments of about $705,000 on the Town Center debt, and interest and principal payments of about $239,000 on the Cirque Park bonds, totalling $944,000 a year.
The combined payments will now increase to about $1.1 million. The total payment goes up because UP will now pay down principal on the Town Center debt. The average interest paid on both debts will drop from 5.67 to 4.42 percent.
It’s the second time the city has refinanced the money it borrowed to purchase the Town Center properties and buy out leases of sitting tenants. The city secured the line of credit in 2003 and converted it to short-term financing four years later.
The city received another bit of good news Wednesday: The cost of the refinancing was less than expected, meaning officials can put another $120,000 in email@example.com