City officials figured out how to save Clarkston and residents some money by refunding bonds at a lower interest rate.
Council voted unanimously, Jan. 23, to approve the refunding.
According to City Manager Dennis Ritter, Clarkston has three series of bonds, which were taken out in 2002 for water lines and road improvements. The three series add to over a million dollars. Interest rates currently range between 3.90 to 4.40, but could mature up to as high as 5.30.
By refunding the bonds, the city could get an interest rate of 3.1 percent, said Ritter, which means the city could save around $157,500 in interest. However, once the city pays bond counsel, the financial advisor, file with the treasury department, and the escrow trustee, the savings is closer to $132,400 saved in interest, which comes out to around eight percent savings.
‘A savings of eight percent from what we’re currently paying, that’s a big deal,? Ritter said.
He also noted it helps out the homeowners as well.
‘What that means to the homeowner is the savings we realize on refunding the current bonds and buying to new ones at a lower interest rate will reduce the amount of money we have to assess against each property,? he said. ‘It will save the residents approximately eight percent of what they would normally pay.?
All bonds in the portfolio are expected to retire between 2022 and 2024.
‘It won’t be long until they’re paid off,? Ritter said. ‘I don’t know what’s going to happen in the future, but we’ll continue to keep an eye on the rates and there may be other series (bonds) we can refund and then reissue.?
Councilman Richard Bisio agreed the bond refunding is a good thing.
‘It will reduce the debt service millage for Clarkston property owners, assuming that the bids come in as predicted by the consultant,? Bisio said. ‘Although the decrease will not be big in comparison to the total tax burden, lower taxes are better.?