WAYLAND - The Wayland City Council approved a resolution to sell city bonds in order to save on their natural gas bills at Wednesday night’s meeting.
The city will sell 70 percent of their bonds with Bill Lindley of Clayton Energy at the helm. Lindley will act as the gas broker and sell the bonds to Goldman Sachs, an investment banking company. The bank is looking to buy bonds in 43 cities across the nation with Wayland being one.
The advantage of buying bonds for the bank is that the bonds are tax-free and they gain 0.85 percent on interest. The advantage to the city is that they will receive a discount on natural gas for how many bonds they sell.
By selling 70 percent of their bonds, they will get a discount on 70 percent of their gas. Depending on the interest rates, the discount could be anywhere from 35-41 cents a gallon which would equate to about $15,000 to $18,000 a year in savings.
The council did not recognize any disadvantages to the sale because there is no potential financaial loss for the city. Lindley will sell all of the bonds but if a buyer does not pay for them, the city will only lose their discount on the gas, thus defeating the purpose of the bonds but with no financial strain. If this is a result, the city will gain back the bonding power that was not paid for.
Mayor Greg Rich said the city has not sold bonds in over 30 years as the practice is becoming obsolete. The intended purpose of selling bonds is for cities to sell in order to gain money for things they could not get loans on. The city does not need a loan on gas, but because interest rates are moving up, they recognized this as a good opportunity to save money by selling off 70 percent of their bonding power.
The motion was approved 5-0. The logistics such as how much the bonds will be sold for, how long and when are yet to be determined. Lindley will present them to the council when he has all of that information.