Just as residents use low interest rates to refinance their homes, the city of St. Petersburg hopes to shift debt on Tropicana Field to save a little bundle.
"The details are not completely set,'' finance director Anne Fritz said Friday, "but we hope to save over $1 million."
The Trop, built in 1986, has been financed and refinanced over the years through several long-term bond issues. The smallest, which runs through 2026, is covered by a $2 million annual payment to St. Petersburg from the state of Florida. That's the debt the city hopes to refinance.
About $17 million remains on that debt, at an interest rate that rises from its current 3.625 percent to 4.65 percent as the bonds mature, Fritz said. The city can borrow money from a bank at a lower interest rate to pay off the bonds, then pocket the difference as the state continues to make its $2 million a year payment, she said.
Financing costs will run about $60,000, Fritz said, but net savings should top $1 million. Bids from three banks are in, she said, but the finance department is still preparing final details and paperwork for City Council approval.
Unlike homeowners who can refinance at will, the city gets a chance to refinance only about every 10 years, she said. When that window came open in a low-interest climate, the city pounced. The deadline is October, giving the city a few months to seal the deal.
The Trop's primary construction debt comes from two other bond issues that will be paid off two years from now. The county's hotel and motel tax covers about $6 million a year in debt — an obligation that ends after the 2015 season. Civic leaders all over Pinellas are lining up to seek a slice of those funds for their own construction projects once the Trop obligation ends.
St. Petersburg also pays about $5 million a year through 2016. After that, only the smallest bond issue will remain — but at a lower interest rate if the refinancing plan works.
The Tampa Bay Rays want to leave the Trop for a new stadium well before their contract expires in 2027. If that happens, any remaining Trop bonds would have to be paid. The payout figure could be wrapped into a financing package for a new stadium.
Stephen Nohlgren can be reached at [email protected]