Village Saves $2.5 Million Through Bond Refunding

In a time when municipalities across the state are tightening their budgetary belts, opportunities to save dollars can offer a welcome pressure release. In Menomonee Falls, village leaders took advantage of one of those opportunities.

In 2002 and 2003, the village issued bonds in both years to fund the renovations at the Falls Civic Center, which includes Village Hall, the police department, and library. The bonds are now callable, and allows the village to refinance at lower rates.

By redeeming the bonds, the village can lower their interest payments from roughly a 5.2 percent rate to an interest rate at or just below 2 percent. Village Manager Mark Fitzgerald will issue a $6.75 million bond and an $8 million bond to pay for the remaining debt at the current interest rates. The action will save the village $2.5 million in the long run, or roughly $220,000 annually.

“It absolutely is a significant savings,” Fitzgerald said. “It’s strictly a function of the bond market and current interest rates as opposed to what they were more than a decade ago.”

The annual savings of $220,000 will funnel into the village’s capital projects fund, which is the source of revenue for needed improvements in Menomonee Falls. However, it will not impact the tax levy.

“This frees up those interest payments to use for other capital projects,” Fitzgerald said. “We have far more capital projects to do and this will certainly help that.

The 20-year municipal bonds are callable after 10-years. They will redeem the 2002 series bond this year, and have set up an escrow fund to pay debt from the 2003 bond, which will be callable next year.

The payments for the two bonds were made utilizing tipping fees from the Orchard Ridge landfill.