The Coeur d’Alene urban renewal agency is trying to pull a fast one on the public (and waste tax money) by “refinancing” the $8.7 million Washington Trust bond (replacing it with a new loan), instead of using some of its $11 million pile of surplus cash (on which it’s earning less than 0.1 percent) to just pay it off.

The agency is now paying 3.26 percent on the bond — incurred in 2011 to pay for McEuen Park. That rate will increase on Sept. 30, and there is no prepayment penalty on the bond. Instead of just paying it off, the agency is taking bids from banks to replace it with a new loan.

The agency’s July 31 financial statement lists “cash and cash equivalents” totaling more than $10.9 million, plus a “WTB bond reserve” of $1.3 million. It also lists “interest income” totaling $8,196 — that’s less than 0.1 percent being earned on that $11-12 million cash pile.

The agency’s total debt is less than $9.5 million. Other than the $8.7 million Washington Trust bond, there are only two items — the Library debt (about $400,000), and debt on the 3rd St./4th St. parking lots (less than $300,000).# So there’s no need for a “rainy day” fund.

With $11-12 million in surplus cash on which it’s earning less than 0.1 percent, why on Earth is the agency taking bids from banks to replace the Washington Trust bond with a new loan? Why not just pay it off with some of its pile of unneeded cash?

Here’s a theory.

Last summer when the city announced it wanted to “de-annex” part of the urban renewal agency — shrink it, take away some of its tax base, take away some of its power — what was the agency’s response?

They howled and squealed like a stuck pig — “Oh, the Washington Trust bond,” “Oh, the covenants to Washington Trust,” “Oh, we can’t possibly do anything without Washington Trust’s agreement.”

In other words, the urban renewal agency used the Washington Trust bond as a roadblock to try to prevent de-annexation. Fortunately, that failed. De-annexation occurred.

But next time the city wants to de-annex more of the agency — and they know that’s coming — if there’s no Washington Trust bond and no replacement loan, there’s no roadblock for the agency to throw up.

For once, the urban renewal agency should do what’s in the best interests of the people.

#: The agency’s OPAs, IRAs and DDAs are not debt, since the agency is obligated to pay the developer only from tax increment, if any, generated at the site. They are not a claim on anything else. The agency’s auditors don’t consider them debt and don’t include them as debt. Coeur d’Alene, instead of serving itself — use some of its mountain of surplus cash to just pay off the Washington Trust bond.

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David Lyons is a Coeur d’Alene resident and retired attorney.