Politics & Government

Bond Refunding Saves Village $2.5 Million

It's the nitty gritty of municipal finance, but low interest rates are creating favorable economic conditions for the village.

The Village Board is looking to save some coin in the long run by taking advantage of low bond interest rates.

Trustees on Monday approved the issuance of two refunded bond series worth a combined $14.7 million. By calling one set of bonds in 2012 and another in 2013, the village capitalizes on low interest rates and will save $2.5 million over the next decade.

The village was able to make the move because the bonds were callable, which means the village could pay them off prior to the bonds' actual maturity date. This gives the village to issue new bonds and essentially refinance the debt at a lower interest rate, if the market allows. However, bonds can only be called after a specified amount of time.

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“Both of these are what I would call no-brainers relative to bond refunding,” Village Manager Mark Fitzgerald said. “It’s a shame we couldn’t do this earlier, but we can only align this with call provisions.”

One of the bond series, worth $6.5 million, was issued in 2002 and helped pay for the construction of and the . The village called that bond, and it will be paid off in full by 2021. For the second bond series, worth $8.2 million, the village will perform an advanced refunding and keep the money saved in an escrow account until they can call them in 2013.

Find out what's happening in Menomonee Fallswith free, real-time updates from Patch.

The Village Board also approved the issuance of $4.6 million in additional bonds to pay for the capital projects budget and other expenses. This is an annual bond issuance for the village, and interest rates continue to remain low for the village at roughly 2.5 percent.

“We are pleased to have these kinds of rates for as long as we possible can,” Fitzgerald said.


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