Currently, the County has a $66 million bond series with a call date in 2022. The current interest rate is around 4.81%. Under changes to our tax law, it is impossible to refund (refinance) them with tax exempt bonds until the call date. But they can be refunded with taxable bonds and at an interest rate under three per cent. The county would save $3.2 million. The County could wait until the call date and save more or less, depending on the interest rate.
"Taxable bonds are nothing new; we've done it before to pay off the swaption," noted Council member John Cusick. He added that changes to the tax law have actually made tax exempt bonds more desirable. But Shearer countered that demand for taxable bonds is also high.
"We're not supposed to gamble with the money of the public," cautioned Council member Bob Werner.
Council member Tara Zrinski asked for a worst case scenario. Shearer said that if the County waited until 2022 to refund, it could realize greater savings than $3.2 million. He recommended that the bind ordinance be drafted in a way that the bond would be issued only if a specified savings of $3.2 million were realized.
Council will consider this possible refinancing in October.
6 comments:
This PFM calculating miscalculators are the same bunch that helped the indicted one sell Allentown water to pay of the pension problem. Now that very same problem has cropped up at close to a hundred million.
Soon the American public will only be able to afford rice as a meal of sustenance paying off all these debts through taxes.
PFM did all that Pawlowski and his hacks Jennings and Oral asked them to do in Allentown.
It’s a farce.
Did they contribute to Fed Ed's campaign? Any campaign contributions from PFM's people in Norco? disclosure?
Sounds like a get rich quick scheme putting more fake paper out there by two institutions that are butt one in the big picture. The big LLP is allways behind criminal acts against the public as a whole. I see another failing system asset being sold off as a barter tool.
what is the total cost to refinance the bonds and how many years will it take just to break even?
I do not have the exact figures. The loan will last no longer than it does now. As I understand it, the county would save $3.2 million, and this is after deducting the costs. I would want to see the exact figures. This would mean an infusion of cash now, but the savings could be much more is the county waited until 2022. could also be less.
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