Citibank tricks Minnehaha County into using them to fund building projects by claiming they are cheaper than the current contractor. As it turns out, using Citibank will actually cost the county more than the previous contractor. On top of that, corporate terrorist Citibank representative Valerie Kuhl stated how charitable Citibank is to help with this project (aka ***** over the people of Minnehaha County). Always interesting to know that screwing over people is now considered charity by Shitibank.
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Citibank financing not such a good deal
Changing lender costs county $1,200 per year
Article Published: 11/4/05, 2:55 am
Minnehaha County commissioners thought a financing deal with Citibank for a new human services center would save the county money, but it will end up costing more than if the county had used its usual method of borrowing.
The county will close Tuesday on a deal to borrow $2.9 million for its share of the cost to remodel the Coliseum Recreation Center into a complex that will house the county welfare office and the city of Sioux Falls health department.
In August, the County Commission voted 3-2 to have Citibank finance the project, moving away from an ongoing bond sales relationship with Dougherty & Co.
Commissioners were told the Citibank deal could save the county $1,900 a year for 20 years compared with an offer from Dougherty & Co. that would have sold bonds to investors.
Citibank will buy the county bonds itself. Interest rates on those bonds fluctuate, and when the county locked in a rate in September, it was at a level where the county will pay $1,200 more a year for 20 years than it would have if it had accepted the Dougherty offer.
County Auditor Sue Roust said that difference is disappointing, but the county can't start over and try to get a better deal.
"If we went back and started over, it would involve two months of work, and there's no guarantee that interest rates would be lower than they are now," she said.
"The deal they offered us was their borrowing rate for the week. They said the interest rate could change."
Commissioner John Pekas, who voted for the Citibank proposal because he thought it would save the county money, said he understands the market changes, and it's a situation that couldn't have been avoided.
"You never know what the market's going to do," Pekas said, comparing it to a home buyer trying to lock in the best rate on a mortgage.
Pekas said there was no reason to go with Citibank other than to save money.
Valerie Kuhl, Citibank vice president for community development and lending, said Citibank still is offering the county a good deal, and Minnehaha County was wise to lock in a rate when it did.
Kuhl said Citibank wants to be involved in more community projects that help low- and middle-income citizens and probably will compete for more government projects in the future.
"What we want to do is make sure we're giving back to the community," she said.
Citibank has targeted low-income housing in the past, Kuhl said, but the one-stop-shopping approach of the human services center was a project that interested her firm.
Commissioner Carol Twedt said she appreciates Citibank's interest and doesn't want the public left with the impression that the bank backed out on its agreement.
The market is not something the bank can control, Twedt said.
Commissioner Jim Zweep said he had concerns about the Citibank arrangement from the beginning, primarily because the agreement does not allow for refinancing of the bonds.
Through the years, the county has refinanced bonds and saved taxpayers money, Zweep said. That will not be possible with the Citibank deal.
"I'm not opposed to Citibank financing it, but they have to be more flexible," he said.
Reach reporter Corrine Olson at 331-2311.
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