Chief of Staff Melissa Murphy said this week that the city is planning to refinance several old loans at lower interest rates, which could save the city more than $100,000 over the life of the loans, with additional loans potentially being targeted for refinancing as well.
“When we went out to bond this last time (for the city’s capital improvements project), our financing company realized that with our bond rating, which is at AA and several other factors, we had a good chance of lowering the interest rate on some of our old debt and that saves us money,” explained Murphy.
The first set of loans being targeted by the city for refinancing includes a total of $2.3 million in loans that were originally taken out in 2004 to help pay for the City Services building and for some school remodeling. Murphy said the new bonds on those loans will save the city $101,000 over the ten year loan period, without extending the length of either loan beyond their current terms. Both are set to expire in March 2022.
Under the current terms of the loans, the city is paying between 3.5 % and 4 % in interest, but through the refinancing based on the city’s bond rating and the term of the new loans, the city would only be paying about 1.5 percent, according to Murphy.
Murphy also noted that the refinancing of the loans is still subject to approval by the Common Council and Board of Aldermen, but the administration is hopeful that both bodies will approve the refinancing plan.