City Council approved the issuance of up to $8.6 million in bonds Monday night, a portion of which will be used to save the City an estimated $400,000 in interest cost due to current low interest rates.
The new bonds will allow the City to refund $4.7 million in oustanding bonds, previously issued at higher interest rates in 2011. The refunding portion of the bond issue will save an estimated $400,000 in interest cost. The remaining $3.8 million will be used to fix to long-term interest rates, notes issued earlier in 2020.
Refunding is the process of retiring or redeeming outstanding bonds through the sale of new bonds. Refunding a bond takes advantage of lower interest rates, resulting in a lower total repayment of bonds. The concept is similar to a homeowner refinancing a home mortgage at lower rates.
“This refunding is part of the City’s ongoing stewardship of taxpayer resources,” said Director of Finance David Delande. “Paying less money in interest allows us to use that money for other projects and services in the community.”
