Chesapeake looks into bonding program

Published 12:31 pm Wednesday, February 29, 2012

CHESAPEAKE — The county’s recently inaugurated Neighborhood Investment Program could get another participant as the village of Chesapeake weighs in on the financial advantage of the program for its community.

The investment program was started last fall by County Treasurer Stephen Burcham as a way to boost the interest rates the county gets on its money. With the struggling U.S. economy the amount the county earns on the renewal of its certificates of deposit continues to drop.

In an effort to boost interest income Burcham is offering to buy bonds from county municipalities at a rate lower than what they could get from a bank, but higher than the rate the county would earn on its CDs. The most recent interest rate the county earned on a CD renewal was 1.7 percent.

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Already the village of Proctorville has joined the program issuing a $200,000 bond to pay off a current loan the village had with a Huntington, W.Va., bank. The loan financed renovations to the village’s water plant and the purchase of two used police cruisers. Burcham provided the village with the terms of five years at 2 percent rate compared with the bank’s offer of seven years at 5 and a half percent.

Recently Burcham explained his program to the Chesapeake council.

“We are trying to determine if we need to bond to get a lower rate,” Chesapeake Mayor Dick Gilpin said.

Right now the village has long-term loans to pay for two road repair projects at North Huntington Heights and one at Symmes Creek.

“We are investigating if the savings is there,” Gilpin said. “You have to pay a bonding fee and add that to the cost.”

Also there is a minimum of $50,000 for a bond, the mayor said.

“The bond is only good for up to 10 years,” Gilpin said. “We might not be able to come up with $50,000 in 10 years, but could in 20 years. It is a pretty good idea if you have the wherewithal to repay that in a certain amount of time. We don’t want to put ourselves in a financial pinch.”